Fed review says its own supervisors saw Silicon Valley Bank’s weakness and did not act

A new Federal Reserve inquiry into the 2023 collapse of Silicon Valley Bank found that bank-supervision staff could have anticipated and prevented the bank’s failure¹. Federal Reserve Vice Chair for Supervision Michelle Bowman outlined the initial findings of the review, which was conducted by Starling Advisory Group². She set them out in a speech in London on Friday³, delivered at the Lord Mayor of London’s luncheon at Mansion House⁶.

The central finding concerns timing rather than rules. Supervisory staff identified Silicon Valley Bank’s vulnerabilities in 2022 but failed to act⁷. A draft report dated September 18, 2026 and commissioned by Bowman found that officials did not address what they had seen⁹. Supervisory delays contributed to the failure⁶.

On the cause of the delay, the review points inward. It attributes the delay primarily to a risk-averse supervisory culture rather than to weaker rules⁵, and Bowman put the failure down to that culture of risk aversion⁷. The Wall Street Journal noted that the report, commissioned by Trump ally Bowman, blamed bank-supervision staff in the Biden era¹.

Why it matters to investors

The findings arrive attached to a policy agenda. In the same remarks, Bowman previewed forthcoming changes to US stress tests⁴, the exercise that shapes how much capital the largest American lenders must hold.

She said the central bank will consider final rules in the coming weeks, in an overhaul framed as making bank stress tests more transparent⁸. Separately, the Fed is to consider changes to its 2027 stress-testing models¹⁰. One area named covers income that encompasses fee and trading revenue banks earn from activities including wealth management¹⁰. Changes to how those revenue lines are modelled feed directly into capital requirements, and from there into buyback and dividend capacity.

What to watch

Three things are unresolved. The first is the document itself: what has been released so far are initial findings from an independent review^3,6, and the version reported on was a draft⁹.

The second is the diagnosis. A conclusion that culture, not regulation, caused the delay⁵ points toward supervisory reorganisation rather than tighter rules, and the accompanying stress-test work runs in the direction of transparency⁸ rather than severity.

The third is timing. The final stress-test rules are described as weeks away⁸, while the model changes are aimed at 2027¹⁰. Until those land, the capital path for large US banks stays open.