Fed staff should have known Silicon Valley Bank was vulnerable, new report finds

• Silicon Valley Bank failed in March 2023 after announcing a $1.8 billion loss on securities sales, with 94% of deposits uninsured and concentrated in venture capital-backed tech companies
• The new review contradicts the 2023 internal assessment by then-Vice Chair Michael Barr, who stepped down in February 2025 to allow President Trump to select Bowman as his replacement
• The findings may prompt questions about Barr's role in the crisis and could fuel Trump's efforts to remove him from his Fed governorship, as Trump has accused the Fed board of being 'hostile' to him

Summary: Fed Staff Should Have Known Silicon Valley Bank Was Vulnerable, New Report Finds

A new independent review by Starling Advisory Group has concluded that Federal Reserve staff "knew, or should have known" about Silicon Valley Bank's (SVB) vulnerabilities before its March 2023 collapse. Fed Vice Chair for Supervision Michelle Bowman announced the findings in a London speech Friday.

Key Facts:

Silicon Valley Bank failed in March 2023 after announcing a $1.8 billion loss from securities sales and a need to raise additional capital. The bank's substantial holdings of U.S. Treasuries had depreciated significantly following the Fed's interest rate hiking cycle. The review found that 94% of SVB's deposits were uninsured and heavily concentrated among venture capital-backed technology companies.

Following a bank run, the Federal Deposit Insurance Corporation (FDIC) and Fed intervened to close the institution and protect depositors.

Regulatory Implications:

This new review goes further than a 2023 assessment by then-Vice Chair for Supervision Michael Barr, which found Fed staff were "overcautious" in their response. The updated findings suggest supervisors should have identified risks in advance, potentially raising questions about Barr's oversight during the crisis.

Barr resigned from his supervisory position in February 2025, allowing President Trump to appoint Bowman as his replacement following Senate confirmation. The report's release may intensify scrutiny of Barr's role and could support Trump's criticism of the Fed board as "hostile." Some analysts suggest the findings might be used to justify attempting Barr's removal from his governor position.

The report underscores ongoing concerns about banking supervision effectiveness and regulatory oversight in the current environment.