Fed Culture of Risk Aversion Blamed in Silicon Valley Bank Collapse

An investigation into the collapse of Silicon Valley Bank (SVB) in 2023 has found that Federal Reserve staff knew or should have known about the bank's exposure a year before its failure, but were hindered by a 'culture of risk aversion.'

The review was conducted as part of an effort to identify lessons learned from SVB's collapse. The findings suggest that Fed staffers failed to act on concerns about SVB's risk-taking, despite being aware of the bank's vulnerabilities.

'A longstanding culture of risk aversion' within the Federal Reserve contributed to the oversight failure, a Fed official said in a statement.