On October 14, Federal Reserve Vice Chair for Supervision Michelle Bowman spoke at the Bangkok Economic Festival about modernizing bank supervision after the 2023 collapse of Silicon Valley Bank (SVB). She said supervisors should focus on identifying material risks and making timely decisions rather than on secondary processes and procedures.
Preliminary findings from an independent review of SVB’s failure said supervisory staff knew the bank was vulnerable to interest-rate and liquidity risks at least nine full months before the Federal Deposit Insurance Corporation placed it into receivership. But unclear lines of authority and accountability at the Federal Reserve hindered timely decisions and specific recommendations to the bank.
The review questioned earlier explanations that attributed the collapse to social media or regulatory changes. It identified accountability and supervisory decision-making problems as the most significant factors. From 2019 until its failure, SVB received 54 Matters Requiring Attention or Matters Requiring Immediate Attention, but none directed the bank to address its key financial risks.
The Federal Reserve is considering changes to clarify the division of responsibility and authority between the Board of Governors and Reserve Bank staff, define decision-making rights for examiners and supervisory leaders, and ensure examination teams can take concerns directly to senior management. In 2025, the Board published its Statement of Supervisory Operating Principles and later refined the principles in light of an independent review of the 2023 banking stress. They call for early identification of material risks and timely, proportionate action.
Bowman stressed that modernization does not mean weakening supervision. Its intensity should reflect a bank’s size, complexity, activities and potential impact on financial stability. Supervisors should focus on addressing risks that could threaten a bank’s resilience or the financial system, rather than increasing the number of findings.
Bowman said international organizations, including the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB), relied on incomplete early reports about SVB’s failure and did not independently verify the information. Findings from those materials were used to support additional regulatory work. She urged international bodies to check the data and analysis behind standards and focus on risks relevant to bank safety and financial stability.
