Fed missed Silicon Valley Bank warning signs

A new outside review found Federal Reserve staff knew or should have known Silicon Valley Bank was vulnerable before its 2023 collapse, according to Fed Vice Chair Michelle Bowman.

“knew, or should have known”

The bank's risky deposit structure

Silicon Valley Bank had 94 percent uninsured deposits concentrated in venture capital-backed technology companies, making it vulnerable when those customers rushed to withdraw funds.

“94 percent uninsured and concentrated in venture capital, backed technology companies”

What triggered the 2023 bank run

Silicon Valley Bank announced a $1.8 billion loss on securities in March 2023 after the Fed raised interest rates, causing its Treasury holdings to lose value. Customers immediately sought to withdraw their funds.

Fed's earlier review blamed regulatory changes

Michael Barr's 2023 review found that a 2018 law reducing regulatory standards prompted a less assertive supervisory approach at the Fed.

New review contradicts earlier findings

The outside consulting firm Starling Advisory Group disagreed with Barr's conclusion, finding that delays in supervisory action were not caused by the regulatory tailoring mandate.

“The delays in supervisory action were not caused by the regulatory tailoring mandate”

Barr steps down, Bowman takes over

Michael Barr stepped down from his supervisory role in February 2025 to allow President Trump to select a new top regulator. Michelle Bowman was confirmed for the position.

Bowman launches major oversight overhaul

The new Fed Vice Chair for Supervision plans to reduce the Fed's supervision and regulation division by about 30 percent, with a dozen senior staff already having left by early September.

White House and critics weigh in

The White House charged that Barr failed to do his job and released a politicized report absolving himself of blame. Senator Elizabeth Warren called the new review an embarrassing attempt to rewrite history.

“failed to do his job throughout this debacle”