Fed officials should have known Silicon Valley banks were vulnerable: report

An outside review of the Federal Reserve’s oversight of the 2023 Silicon Valley bank failure found that Fed staff “knew or should have known” that the bank was vulnerable before the crisis, Fed Vice Chair for Supervision Michelle Bowman said Friday.

In a speech in London on Friday, Bowman announced the findings of a study by consulting firm Sterling Advisory Group.

Silicon Valley Bank experienced a bank run in March 2023 after it announced it had lost $1.8 billion by selling securities and needed to raise more capital. After the Fed began raising interest rates, the value of the bank’s large holdings of U.S. Treasuries fell.

Bowman said the study found that the bank’s deposits were “94% uninsured and concentrated in venture capital-backed technology companies.”

After the execution, the Federal Deposit Insurance Corporation and the Federal Reserve stepped in to shut down banks and insure depositors.

Michael Barr, then the Fed’s chief supervisory officer, reviewed the incident in 2023. As a result, Fed staff proved to be overly cautious in responding to the incident.

The new review goes further, saying Fed regulators knew or should have known about the risks in advance.

Barr resigned from his supervisory post in February 2025 to allow President Donald Trump to select a new top regulator for the Fed. The President nominated Mr. Bowman and the Senate confirmed him to the position.

Although Bowman’s statement did not identify Barr by name, the results of the new investigation are likely to raise new questions about Barr’s role in the crisis.

A Fed spokesperson did not return a call seeking comment on the new report.

President Trump accused the Federal Reserve board of being “hostile” toward him. Some analysts believe the report will prompt President Trump to fire Barr as governor.