Federal Reserve admits supervisors saw Silicon Valley Bank’s problems and didn’t act fast enough

The Federal Reserve’s independent review of Silicon Valley Bank’s spectacular failure delivered a verdict that reads like a corporate autopsy with a side of institutional self-criticism: the Fed’s own supervisory staff identified vulnerabilities at SVB and simply did not move quickly enough to force the bank to fix them. The review, led by Vice Chair for Supervision Michael S. Barr, found that SVB had 31 open supervisory findings at the time it collapsed on March 10, 2023. That’s roughly three times the average for banks of comparable size. A bank that tripled in size while regulators watched SVB’s total assets surged from approximately $71 billion in 2019 to over $211 billion by 2021, a nearly threefold increase in just two years. Supervisors flagged interest rate risk deficiencies in CAMELS examinations during the 2020, 2021, and 2022 review cycles. Yet formal supervisory action didn’t arrive until November 2022, just a few months before the bank’s collapse. The $40 billion bank run On March 9, 2023, depositors withdrew more than $40 billion from the bank in a single day, triggered by a failed capital raising effort that spooked an already nervous client base. By March 10, the ba...