Fed Review Finds Social Media Not to Blame for SVB Collapse

The Federal Reserve's independent review of Silicon Valley Bank (SVB) has found that social media did not trigger the bank run, contradicting earlier accounts.

The review, led by Michelle Bowman, Vice Chair for Supervision at the Fed, analyzed data from Charles River Associates and concluded that 96% of social media discussion about the run occurred after SVB's failure was inevitable.

Bowman stated that the bank's deposit book, which was 94% uninsured and concentrated in venture capital-backed technology companies, was a major contributor to its collapse. The review also found that SVB lacked operational readiness to borrow from the Fed's discount window when it needed liquidity.

The report highlighted the need for banks to understand their deposits and identify concentrations within their funding. Bowman noted that the bank's supervisory staff recognized vulnerabilities as early as March 2022, but did not take prompt action to address them due to a 'long-standing culture of risk aversion.'