More than three years after Silicon Valley Bank collapsed, an independent report finds that Federal Reserve supervisors knew, or should have known, that the bank was dangerously exposed a full year before its March 2023 failure but held back for fear of making the wrong call.
The review, conducted by the Starling Advisory Group at the request of Fed Vice Chair for Supervision Michelle Bowman, examined the second-largest bank failure in U.S. history. It concluded that Fed staff spotted the lender’s fatal weaknesses as early as March 2022 yet did not push it to reduce its interest rate risk or its concentration of vulnerabilities. Bowman presented the findings in a London speech on Friday.
Silicon Valley Bank had used client deposits to buy billions of dollars of long-term U.S. Treasurys and mortgage-backed securities when rates were near zero. When the Fed raised rates through 2022 and into 2023, those holdings lost value. After the bank sold securities at a $1.8 billion loss and said it needed to raise capital, depositors fled. The review found that deposits were “94 percent uninsured and concentrated in venture capital–backed technology companies.” The bank primarily served tech startups, venture capital firms, and healthcare companies.
The report traces the inaction to a long-standing culture of risk aversion. Staff believed it was personally safer to take no action than to risk being wrong, a problem compounded by a lack of clarity regarding who held the authority to confirm a decision was correct. “The review revealed that too many staff members feel it is personally safer to take no action than to risk taking the wrong action,” Bowman said.
The findings diverge from an earlier internal review led by then-Vice Chair for Supervision Michael Barr in April 2023, which blamed a 2018 law for prompting a less assertive supervisory approach. The new review rejected that link, with Bowman stating the delays “were not caused by the regulatory tailoring mandate.” Barr stepped down from the supervisory role in February 2025, and President Donald Trump selected Bowman, who was later confirmed by the Senate.
The study also challenged a widely repeated account of the collapse. An analysis by Charles River Associates, commissioned within the review, concluded that social media did not trigger or accelerate the run, finding that 96% of related online chatter appeared only after the bank’s failure was already inevitable.
The report drew sharp political reaction. Sen. Elizabeth Warren, ranking Democrat on the Senate banking committee, called it “an embarrassing attempt to re-write history designed to pave the way for more dangerous deregulation that will lead to the next Silicon Valley Bank disaster.”
Bowman is already reshaping how the central bank polices lenders, having said she plans to cut the Fed’s supervision and regulation division by about 30%. Examination teams will submit monthly reports directly to the heads of supervision and their reserve banks, flagging any issue where an examiner was uncertain.