The Federal Reserve’s supervision of Silicon Valley Bank failed on timeliness, not on information, according to an independent review whose preliminary findings Vice Chair for Supervision Michelle Bowman presented in a speech published on October 14. Supervisors across the system knew about the bank’s exposure to interest rate and liquidity risk at least nine full months before the FDIC took it into receivership in 2023, the review found, but uncertainty about decision making authority and a lack of clear accountability impeded action.
The detail is stark. SVB accumulated 54 matters requiring attention or immediate attention between 2019 and its failure, yet none of those findings required the bank to address its core financial risks, Bowman said, because supervisory attention centred on process, governance and controls rather than on the underlying exposures. The review also corrects two earlier accounts: it finds that social media was not to blame for the run, and that the failure to act was not caused by statutory tailoring or regulatory changes, but by long standing problems in supervisory accountability.
Bowman’s remedy is organisational. The Federal Reserve System is considering a clearer allocation of responsibility, authority and accountability between Board and Reserve Bank staff, clear decision rights for examiners and supervisory leadership, and direct escalation channels from examination teams to senior leadership. The Board’s Statement of Supervisory Operating Principles, first published in the fall of 2025 and refined since, is being updated to incorporate the review’s lessons, with a stated focus on early identification of material risks and timely, proportionate action.
She extended the argument to the international standard setters she works with as chair of the FSB’s Standing Committee on Supervisory and Regulatory Cooperation. The review found that both the Basel Committee and the FSB relied on the early, incomplete US reports, in places taking language nearly verbatim, and built further work on findings that were not based on complete information. Her conclusion was that those bodies must validate the data they rely on and refocus on material risks to safety, soundness and financial stability.
For rates readers, the speech is a reminder that duration risk on bank balance sheets remains a supervised vulnerability in a 5 percent world. The 2023 lesson, on this telling, was not that supervisors lacked the data on unrealised bond losses and uninsured deposit concentration, but that no one owned the decision to force a fix while fixing was still cheap. Whether the new decision rights change that is the test the next selloff will apply.