Federal Reserve Vice Chair for Supervision Michelle Bowman announced that the U.S. central bank has engaged an external review to examine the sequence of events that culminated in the failure of Silicon Valley Bank.
In an interview on Fox Business Network's "Mornings with Maria," Bowman said: "What happened there was really a failure of supervision and a failure of bank management." She added: "We’ve just hired an external review to be conducted on all of the events that led to the failure of Silicon Valley Bank to ensure that we don’t repeat the same mistakes going forward."
The collapse of Silicon Valley Bank in 2023 unfolded quickly after depositors withdrew funds en masse, and the bank's abrupt failure contributed to stress across the banking sector, during which a handful of other banks also failed. The decision to bring in outside reviewers follows an earlier internal examination of the episode.
The Fed previously carried out an internal review of the lead-up to SVB's failure. That internal exercise was led by Fed Governor Michael Barr and concluded that the bank was insufficiently monitored after a period of rapid growth. The review further found that examiners had been slow to require the bank to address its shortcomings.
Bowman, as the Fed's chief regulatory official, is advancing a broad overhaul of bank supervision inside the central bank. Her agenda includes the installation of new leadership in supervisory roles and a plan to reduce Washington-based staff by about 30 percent. As part of her reform push, she has argued that examiners should concentrate more on core financial risks at banks, asserting that they had become overly absorbed with process issues and non-core policy areas.
By commissioning an external review, Bowman has signaled a renewed focus on pinpointing the supervisory and management failures that led to the SVB collapse and on preventing similar lapses in the future. The scope and timeline of the external review were not detailed in her remarks.
Context and next steps
Bowman's announcement frames the external review as a corrective measure intended to complement prior internal work and to inform the ongoing supervisory restructuring. The external review will examine the events that led to SVB's failure; specific procedural details about the review were not disclosed in the interview.