Fed Staff Knew or Should Have Known About SVB Trouble

Staffers at the Federal Reserve knew or should have known about Silicon Valley Bank's (SVB) severe trouble mounting as early as March 2022, but failed to act before the lender's implosion set off a mini-banking crisis in 2023, according to an independent review.

The preliminary report found that SVB 'failed as the result of confluence of vulnerabilities' including mounting losses on securities, a deposit base prone to bank runs, and a lack of readiness to borrow from a critical Fed program.

Michelle Bowman, the top banking regulator at the Fed, said the independent report found that despite knowing or should have known about these vulnerabilities, staffers failed to take 'prompt and decisive action' to prevent the collapse.

Bowman attributed this inaction to a long-standing culture of risk aversion within the Fed, where staff believed it was safer not to act unless they were certain their actions would be exactly right.