Bowman says Fed supervisors should have flagged SVB risks by March 2022
The Fed's vice chair for supervision says a risk-averse culture, not looser rules, delayed action on Silicon Valley Bank
Published
Federal Reserve Vice Chair for Supervision Michelle Bowman said an independent examination she ordered found that Fed supervisors should have identified weaknesses at Silicon Valley Bank as early as March 2022, more than a year before the bank collapsed.
Bowman said the delay did not stem from the Fed's earlier move to ease supervisory rules for regional banks. Instead, she pointed to a culture of risk aversion among supervisors, who she said were unsure of their own authority to act and so did not escalate concerns about the bank's condition.
The Fed's handling of Silicon Valley Bank has drawn criticism since the bank failed in 2023, with some arguing that the 2018 rollback of stricter oversight for mid-sized banks left supervisors with fewer tools to catch problems early. Bowman's findings reject that link, placing the failure instead on how supervisors used the authority they already had.
The framing matters beyond the bank itself. President Trump has pushed the Fed to cut rates and questioned its independence, and any admission that deregulation caused the 2023 banking stress would have added pressure on the central bank to reverse its lighter-touch rules. By locating the failure in supervisory execution rather than in the rules themselves, Bowman gives the Fed grounds to keep its current approach to oversight without reopening that fight.