Fed’s Bowman says new external review of Silicon Valley Bank failure underway

By Pete Schroeder

NEW YORK, March 20 (Reuters) – Federal Reserve Vice Chair for Supervision Michelle Bowman said Friday that the U.S. central bank is taking another look at what went wrong with Silicon Valley Bank three years ago.

“What happened there was really a failure of supervision and a failure of bank management,” Bowman said in an interview on Fox Business Network’s “Mornings with Maria”. “We’ve just hired an external review to be conducted on all of the events that led to the failure of Silicon Valley Bank to ensure that we don’t repeat the same mistakes going forward,” she said.

The abrupt 2023 collapse of SVB following a rapid outflow of bank depositors set off broader turmoil in the banking sector, which saw a handful of other banks also collapse. The Fed previously conducted an internal review of what led up to its failure, led by Bowman’s predecessor, Fed Governor Michael Barr. That review found the bank was insufficiently monitored following rapid growth and examiners were slow to force the bank to address its issues.

As the Fed’s top regulatory official, Bowman is pursuing a sweeping overhaul of its bank supervision, ushering in new leadership and aiming to trim 30% of its Washington staff. Bowman has said examiners need to refocus their energy on core financial risks at banks, arguing examiners have become overly focused on process matters and non-core bank policies.

(Reporting by Michael S. Derby; Editing by Chizu Nomiyama)