Fed's Supervisory Staff Did not Take 'Prompt and Decisive Action' to Prevent SVB's Failure

Dow Jones
Yesterday

0956 ET - Michelle Bowman, Vice Chair for Supervision of the Fed's Board of Governors, announces the initial findings of the independent review of Silicon Valley Bank's collapse in 2023. "SVB failed as the result of a confluence of vulnerabilities including real but unrealized accounting losses on its securities portfolio that exceeded its capital," Bowman says when delivering remarks in London. Bowman also says the supervisory staff at the Fed knew, or should have known, about these vulnerabilities as early as March 2022. "Supervisory staff did not take prompt and decisive action to encourage or require SVB to reduce its interest rate risk or concentration of vulnerabilities," a published text of her remarks says. Bowman believes one significant factor contributing to supervisory inaction was a long-standing culture of risk aversion.

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