A new independent review faults the Federal Reserve’s supervisory culture for risk aversion and unclear decision-making, signaling inaction that contributed to Silicon Valley Bank’s collapse.

Preliminary findings attribute SVB’s failure to a mix of mounting securities losses, a heavily uninsured and deposit-base prone to runs, and inadequate readiness to borrow from the Fed, all framed within a culture of hesitancy among supervisory staff.

The report emphasizes internal Fed culture—ambiguities in lines of authority, accountability gaps, and risk-averse conduct—as the core issue, rather than external regulatory constraints or directives from former supervisors.

Bowman described Starling’s report as the first installment in a broader series of findings from the independent review.

Political and regulatory reaction is already forming, including calls for independent scrutiny of Bowman's hiring of Starling and renewed debates over bank regulation after SVB’s failure.

Analysts speculate the findings could fuel political moves, including potential pressure on former President Trump to press for changes affecting Barr’s position at the Fed.

The report rejects social media as a driver of the SVB run, citing analysis showing 96% of online discussion occurred after the run was already underway.

Starling’s presentation, via Fed regulator Michelle Bowman, underscored that social media did not initiate or accelerate SVB’s run.

The analysis, conducted for Starling by Charles River Associates, concluded social chatter did not cause the run and was largely a post-hoc phenomenon.

The Fed did not issue an immediate public comment on the new findings, as the release comes amid broader questions about its independence and leadership.

SVB’s run in March 2023 followed disclosure of a $1.8 billion securities loss and capital raise needs, in a environment of rising rates diminishing the value of its Treasury holdings.

The findings challenge the view that 2018 deregulation alone caused supervisory failures and stress that delays were not driven by directives from former Vice Chair Randal Quarles, who left in 2021.