Fed Knew of SVB Risks but Feared Being Wrong, Report Says

The report described a supervisory environment where the perceived cost of acting incorrectly outweighed the cost of not acting at all. Staffers lacked clear guidelines on when to escalate concerns. A lack of clarity regarding decision rights compounded this culture: supervisory staff were unsure who could provide certainty that a particular action was correct. The report recommended clearer decision rights and a shift in accountability.

"We are addressing the culture problem head-on," Bowman said. "The review revealed that too many staff members feel it is personally safer to take no action than to risk taking the wrong action."

Going forward, Bowman said examination teams will submit monthly reports directly to the heads of supervision and their respective reserve banks. These reports will identify any supervisory issue or concern in which an examiner was uncertain.

Social Media Did Not Trigger the Run

The review also addressed a common narrative about SVB's failure. Many have asserted that social media fueled the run on the bank. The independent review found that none of these accounts made any effort to substantiate that claim.

At Starling's request, Charles River Associates analyzed the claim. It concluded that social media did not trigger the bank run at SVB, nor was there evidence that social media accelerated the run. The analysis determined that 96% of the social media chatter regarding the run appeared after SVB's failure was inevitable. The finding pushes back against a widely repeated story that Twitter and other platforms caused a modern bank run, pointing instead to traditional deposit runs driven by fundamental solvency concerns.

"The American people deserve a banking system that is safe, sound, and resilient," Bowman said. "They deserve supervisors who constantly assess the banking system to identify vulnerabilities and have the will to act promptly and decisively when material vulnerabilities are identified. And they deserve leaders who are unafraid to examine their own shortcomings with the same rigor we apply to the institutions we supervise."