Fed Knew SVB Was Vulnerable Over Year Before Collapse

An independent review has found that Federal Reserve supervisory staff knew of Silicon Valley Bank's vulnerabilities over a year before its collapse in March 2023.

The review, led by consulting firm Starling Advisory Group, was commissioned by the Fed to investigate the bank's failure and identify lessons to be learned for future oversight. According to the review, SVB's deposit base was 94% uninsured and heavily concentrated among venture capital-backed technology companies.

The report also identified a 'culture of risk aversion' within the Fed's supervisory apparatus as a key factor in its failure to act on these vulnerabilities. Examiners were found to have been hesitant to take action due to fears of making incorrect decisions, rather than prioritizing oversight and regulation.