Vice Chair for Supervision Michelle W. Bowman announced the initial findings of an independent review of Silicon Valley Bank's failure during a speech at Mansion House in London on September 18, 2026. The review, conducted by the Starling Advisory Group, marks what Bowman described as a pivotal moment in understanding not only what went wrong at SVB but also what went wrong within the Federal Reserve's supervisory process. SVB's collapse in March 2023 sparked contagion that spread to Signature Bank and First Republic Bank and threatened the broader banking system, requiring extraordinary government intervention. Bowman said the episode fundamentally shook public confidence in the effectiveness of bank supervision, and that transparency is where accountability begins.
The preliminary report identifies a confluence of vulnerabilities at SVB, including real but unrealized accounting losses on its securities portfolio that exceeded its capital, a run-prone deposit base that was 94 percent uninsured and concentrated in venture capital-backed technology companies, and a lack of operational readiness to borrow from the discount window when needed. The review found that Federal Reserve supervisory staff knew, or should have known, about these vulnerabilities as early as March 2022. Despite that knowledge, staff did not take prompt and decisive action to encourage or require SVB to reduce its interest rate risk or concentration of vulnerabilities.
The report also addresses what did not cause the supervisory delays. It found that the regulatory tailoring mandate in the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 was not responsible, nor was any directive or suggestion from the former Vice Chair for Supervision to reduce supervisory intensity. The former Vice Chair had stepped down in October 2021, well before 2022 when SVB's vulnerabilities became most apparent. Instead, the review identified a long-standing culture of risk aversion as a significant factor, with staff believing it was personally safer to take no action unless they were certain the action was exactly right. A lack of clarity regarding decision rights compounded this culture, as supervisory staff were unsure who could provide certainty that a particular action was correct.
The review also challenges postmortem narratives about social media's role in the bank run. Bowman said that while many accounts asserted that social media fueled the run at SVB, none made any effort to substantiate that claim. Charles River Associates analyzed the claim at Starling's request and concluded that social media did not trigger the bank run and there was no evidence that social media accelerated it. Among other findings, 96 percent of the social media chatter regarding the run appeared after SVB's failure was inevitable.
Bowman said the Federal Reserve has not waited for the review to be completed to address some of the shortcomings. The Fed issued a Statement of Supervisory Operating Principles that refocuses supervision on identifying significant threats to the safety and soundness of banking organizations and U.S. financial stability as early as possible, and then taking prompt, decisive action to require banking organizations to take appropriate, proportionate actions to eliminate or mitigate those threats. The initial report is the first in a series, and its independence from Federal Reserve System staff and principals was structured to ensure the integrity and reliability of the review and its findings.