Silicon Valley Bank failure review finds Fed staff ‘should have known’ about risks

An outside consulting firm's independent review of the collapse of Silicon Valley Bank produced initial findings indicating that Federal Reserve supervisory staff "knew or should have known" about the institution's vulnerabilities, Fed vice chair for supervision Michelle Bowman said on Friday. The study represents an early assessment of the supervisory lapses associated with the bank's failure. Bowman presented the review's conclusions as preliminary, noting they came from the consulting firm's initial analysis. She attributed the collapse — the largest U.S. bank failure since the 2008 financial crisis — in part to problems identified in the supervisory process, according to the summary of the review. The outside firm's report focuses attention on the Federal Reserve's oversight practices and whether supervisory staff sufficiently recognized and acted on risks at the bank. Bowman’s public remarks mark a notable step in the postmortem examination of how regulators monitored Silicon Valley Bank before its failure. Further details about the review's full findings, the consulting firm's identity, and any recommended changes to supervision were not provided in the initial summary released on Friday. The preliminary nature of the report suggests additional analysis and possible follow-up actions by the Federal Reserve and other authorities.