Fed Staff Faulted for Failing to Prevent SVB Collapse
Fed staff knew or should have known Silicon Valley Bank was at risk as early as March 2022, an independent review concluded. Staff failed to take prompt action before the bank collapsed in 2023.
- 94% of SVB's deposits were uninsured, concentrated in venture capital-backed tech firms.
- $1.8 billion loss on securities sales triggered the bank run in March 2023.
- Consulting firm Starling Advisory Group conducted the review, which remains unreleased.
- Fed Vice Chair Michelle Bowman cited a 'culture of risk aversion' among supervisory staff.
Why it matters: The review goes further than a 2023 internal Fed assessment, directly stating supervisors should have flagged risks in advance. The findings could reshape how the Fed oversees large banks.
- Staff inaction was compounded by unclear decision-making authority, Bowman said.
How 7 sources split on this story
Where they split: The core dispute is whether the review is a good-faith supervisory lesson or a politically motivated effort to shift blame away from the current administration.
Center coverage, 5 sources: The center presents the review as a factual supervisory finding while noting its political implications, including possible pressure on Barr and Trump's broader criticism of the Fed board.
CNBC7hFed staff should have known Silicon Valley Bank was vulnerable, new report finds
Financial Times5hCourt shines a further light on who was at fault in SVB implosion
Axios4hRethinking Silicon Valley Bank's failureCNCTV News2hReport faults Fed staff for epic failure of Silicon Valley Bank
The Hill2hSilicon Valley Bank failure review finds Fed staff ‘should have known’ about risksLeft coverage, 1 sources: The left frames the review as a politically convenient document that deflects blame from the Trump administration and sets up deregulation, citing Sen. Elizabeth Warren's criticism of Bowman.
What’s next: Analysts say Trump may use the report to press for Barr's removal from the Fed board.
- Barr still serves as a Fed governor and votes on interest rate decisions.
- Will the full Starling Advisory Group report be released publicly?
- Will Trump move to remove Barr from the Fed's Board of Governors, and on what legal basis?
- Will the findings produce concrete changes to Fed supervisory culture or decision-making rules?