New Report on SVB Collapse Pins Blame on Fed’s Own Regulators, Fed Official Says
An outside review of the Federal Reserve found that its supervisors knew about Silicon Valley Bank's vulnerabilities before the 2023 failure but failed to act. A Fed official stated that a "culture of risk aversion" hindered oversight, as regulators feared being wrong. The report describes the staff's inaction as an epic failure, noting that supervisors should have recognized the bank's risks. In the wake of these findings, the White House has attacked a Fed official regarding the review's conclusions.
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- ✓ An outside review found Fed supervisors were aware of Silicon Valley Bank's risks before its 2023 failure.
- ✓ A Fed official attributed hindered oversight of the bank to a "culture of risk aversion".
- ✓ The report concludes Fed regulators avoided action because they feared being wrong.
- ✓ Fed staff should have known the bank was vulnerable.
What changed
An outside review report identifies a culture of risk aversion among Fed regulators as a cause of the SVB collapse.
Live updates
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Fed Review Blames Internal Regulators for Silicon Valley Bank Collapse
An outside review of the Federal Reserve found that its supervisors knew about Silicon Valley Bank's vulnerabilities before the 2023 failure but failed to act. A Fed official stated that a "culture of risk aversion" hindered oversight, as regulators feared being wrong. The report describes the staff's inaction as an epic failure, noting that supervisors should have recognized the bank's risks. In the wake of these findings, the White House has attacked a Fed official regarding the review's conclusions.
Why it matters
The collapse of Silicon Valley Bank in 2023 triggered significant instability in the banking sector. This review examines whether regulatory negligence contributed to the implosion. It highlights a systemic failure in how the Fed monitors risk in large financial institutions.
What is confirmed
- An outside review found Fed supervisors were aware of Silicon Valley Bank's risks before its 2023 failure.
- A Fed official attributed hindered oversight of the bank to a "culture of risk aversion".
- The report concludes Fed regulators avoided action because they feared being wrong.
- Fed staff should have known the bank was vulnerable.
Still unconfirmed
- The White House attacked a Fed official following the review of the collapse.
- Court proceedings have provided further information regarding fault in the implosion.
What to watch next
- Official responses from the Federal Reserve to the specific failures cited in the report
- Further details from court proceedings regarding fault in the SVB collapse
confidence 90%Sources used for this update (9)
- WSJ — New Report on SVB Collapse Pins Blame on Fed’s Own Regulators, Fed Official Says
- Yahoo Finance — Fed sat on Silicon Valley Bank flaws because regulators feared being wrong, report finds
- CNBC — Fed staff should have known Silicon Valley Bank was vulnerable, new report finds
- CNN — Report faults Fed staff for epic failure of Silicon Valley Bank | CNN Business
- Axios — Rethinking Silicon Valley Bank's failure
- Financial Times — White House attacks Fed official after review of Silicon Valley Bank collapse
- Financial Times — Court shines a further light on who was at fault in SVB implosion
- Reuters — Report finds 'culture of risk aversion' hindered oversight of SVB, Fed official says
- qz.com — Fed's outside review found its SVB supervisors knew about the bank's risks before its 2023 failure
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