Federal Reserve Vice Chair for Supervision Michelle W. Bowman said a newly released independent review of the 2023 failure of Silicon Valley Bank (SVB) found that supervisors identified the bank's major vulnerabilities many months before its collapse but did not make appropriate use of that information. Bowman, who commissioned the review earlier this year, presented its preliminary findings in an October 14, 2026 speech on supervisory modernization delivered at the Bangkok Economic Festival of the Reinventing Bretton Woods Committee in Bangkok, Thailand.

The full text of the speech is available on the Federal Reserve's website, and a PDF version is also published by the central bank.

Bowman organized her remarks around three related aspects of supervisory modernization. First, lessons from the newly released independent assessment of SVB's failure about the importance of timely supervisory action. Second, how the Federal Reserve is enhancing supervisory effectiveness so that decisionmaking authority is clear and examiners are more accountable for taking timely action. Third, how modernization can improve the work of supervision around the world, including under the direction of standard-setting bodies such as the Basel Committee on Banking Supervision (BCBS) and the Financial Stability Board (FSB).

"It is good to be with you to discuss ensuring that the global financial system is positioned to adapt to the changing economic environment," Bowman said, noting that "the pace of change has been brisk." She added: "Our financial system is evolving rapidly. Therefore, it is important that we periodically review our regulatory and supervisory frameworks to consider how to best keep pace with that evolution."

Independent Review of Silicon Valley Bank

Bowman described the 2023 failure of SVB — the technology and venture capital-focused lender that the Federal Deposit Insurance Corporation took into receivership in March of that year — as "a case study with critical lessons for bank supervisors at home and abroad." While prior reports on SVB provided important information, she said, they were produced on an expedited basis with a limited scope and failed to comprehensively address important data related to the failure. As a result, those reports were incomplete and "perpetuated a number of unreliable conclusions."

"That is why, earlier this year, I commissioned an independent review of the bank failure and the Federal Reserve's related supervision," Bowman said. "The review closes prior gaps and corrects important misimpressions regarding SVB's failure." Its preliminary findings, she said, substantiate "difficult but important critiques" regarding Federal Reserve System supervision failures to act in a timely manner and to communicate actionable guidance to SVB.

A central finding is that supervisors had information about SVB's major vulnerabilities many months before its failure but did not make appropriate use of it. Frontline examiners, risk and surveillance specialists, and Reserve Bank and Board staff knew about SVB's exposure to interest rate and liquidity risk at least as early as nine full months before the Federal Deposit Insurance Corporation took the bank into receivership — that is, by mid-2022. The review concludes that long-standing uncertainty about decisionmaking authority and the lack of clear accountability impeded timely decisionmaking.

The preliminary review also corrects earlier mischaracterization, according to Bowman: social media was not to blame for the run on SVB, and the Fed's failure to act was not caused by statutory tailoring or regulatory changes such as those under the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, the law that raised the asset threshold at which banks face the Fed's enhanced prudential standards. Instead, the report identifies long-standing problems in supervisory accountability and decisionmaking as the most significant contributors to the failure to issue timely critical enforcement actions related to core risks.

The Imperative of Timely Action

Bowman emphasized that while supervisory decisions must be grounded in evidence, legal authority, and judgment, the impact of supervisory decisions "is only effective if delivered in time." When supervisors note vulnerabilities as they emerge, banks have more options and flexibility to course correct. At the point when weakness emerges, a bank can often gradually reduce exposure, strengthen its liquidity position, improve contingency planning, or raise capital under normal market conditions.

"But where supervisors perpetually delay communication or action—to continually wait for additional evidence, more concurrence, or another committee meeting—supervision bogs down and loses effectiveness," she said. "Timely and efficient action is key to successful supervisory outcomes."

The review notes that supervisory attention at SVB often centered on process, procedure, governance, and controls rather than on mitigating the underlying interest rate and liquidity exposures. SVB had 54 matters requiring attention or immediate attention — formal supervisory findings obligating a bank to correct identified deficiencies — between 2019 and the time of its failure, yet none of those supervisory findings required the bank to address its core financial risks.

"In other words, a supervisory organization can be extremely busy and still fail to focus sufficiently on the risks that matter most," Bowman said. Such an organization can issue many findings, require firms to spend significant time and resources on remediation of less important process-related issues, and devote enormous resources to governance and process while failing to compel action on "the vulnerabilities most capable of threatening the institution's existence."

Supervisory Prioritization and Accountability

A supervisory culture of timely action must also be paired with clear roles and responsibilities so that supervisors are empowered to act, Bowman argued. The independent review describes uncertainty within the Federal Reserve System about decision rights and lack of accountability across the supervisory system. In the Fed's structure, different groups identified risks, many others were expected to concur, and yet no individual clearly owned the obligation to reach a decision and propel action.

A modern supervisory organization, she said, needs clear answers to basic questions: Who owns the decision to move forward? Who has authority to act? Who is accountable for ensuring that a material risk is addressed? And when different parts of the organization disagree, who is responsible for resolving that disagreement and pressing forward?\nBowman observed that modern supervisory organizations increasingly rely on surveillance, specialist teams, and data analysis that allow them to identify patterns across institutions—capabilities she described as enormously valuable. "But identifying a risk matters only if there is a clear path from information to judgment and from judgment to action," she said.

For that reason, the Federal Reserve System is considering ways to enhance its supervisory decisionmaking framework to ensure:

• more direct allocation of responsibility, authority, and accountability between the Board and Reserve Bank staff;
• clear decision rights for examiners and supervisory leadership; and
• direct escalation channels from examination teams to senior supervision leadership.

In the fall of 2025, the Board published a Statement of Supervisory Operating Principles clearly stating its expectations about how supervisors should conduct supervision. Bowman said those principles have since been refined, most recently to incorporate lessons learned from the independent review of the 2023 banking stress, the turmoil that also brought down Signature Bank and First Republic. Publishing the principles, she said, further improves supervisory transparency and accountability. They refocus supervisory efforts on what matters most: early identification of material risks, exercising sound supervisory judgment, and a broad range of supervisory tools to enable timely and proportionate action to address material risks before they threaten the safety and soundness of an institution or the stability of the financial system.

For the banking industry, the significance is practical: how those decision rights are ultimately assigned would shape how quickly examiner findings on material risks reach senior leadership and who answers when action stalls. With the review's findings still preliminary, how the Fed finalizes and implements the revised principles and decision rights remains the item to watch.

International Implications and Proportionality

The benefits of the Federal Reserve's supervisory modernization efforts are not limited to the United States, Bowman said, noting that the reforms and lessons learned from the independent review are equally applicable to supervisors around the world. As chair of the FSB's Standing Committee on Supervisory and Regulatory Cooperation, she has engaged many member jurisdictions to advance the FSB's regulatory and supervisory modernization agenda. The FSB's 2026 work program reflects that countries around the world are also evaluating whether regulatory and supervisory frameworks remain well suited for future financial systems.

"There are important common themes in that work," Bowman said. "Modernization is not about doing less. It is about more effectively prioritizing the things that matter the most." That includes concentrating on material risks, appropriately tailoring supervisory intensity, periodically reconsidering processes that may have accumulated over time to ensure they are still fit for purpose, and providing clarity so that supervisors can reach decisions quickly enough to make a difference.

Tailoring or proportionality, she stressed, does not mean weaker supervision. It means directing supervisory attention to the risks that are most material given an institution's size, complexity, activities, business model, interconnectedness, and potential impact on financial stability. A community bank engaged in conventional lending and deposit-taking does not require the same supervisory approach as a globally active institution engaged in complex trading and cross-border activities.

The purpose of prioritization is to distinguish issues that are genuinely capable of threatening safety and soundness from matters that may warrant attention but do not present the same degree of financial risk, Bowman said. This distinction requires supervisory judgment, and judgment inevitably requires making choices. A supervisory organization that treats every issue as equally important will tend to devote substantial attention to matters that are easiest to document, measure, and track, leaving other risks that require synthesis, experience, and enhanced judgment to receive less attention than they deserve.

"The objective should not be to maximize the number of findings that are issued," she said. "It should be to identify the risks that matter most and address them while there is still time to alter the trajectory."

International bodies, including the BCBS and the FSB, can help most in this supervisory modernization effort by focusing on their core mandates and by remaining evidence- and data-driven, Bowman said, prioritizing work on areas that matter most—issues related to safety and soundness as well as financial stability.

International Lessons Learned

The independent review of SVB shows that international standard-setting bodies, including the BCBS and the FSB, relied unquestioningly on incomplete reports compiled quickly and shortly after the failure of SVB, Bowman said. The review found that both the BCBS and the FSB took language nearly verbatim from other reports published in the United States that were not based on complete or accurate information, and determined that their reports generally repeated existing claims from other reports rather than independently verifying the information or increasing the breadth of evidence offered in their support.

As a result, the purported lessons learned put forth in the April 2023 report by then–Vice Chair Barr — the Federal Reserve's own expedited post-failure assessment — were initially used to justify additional regulatory work, including at the BCBS and the FSB. That work "was inherently flawed because it was based on incomplete and faulty initial report findings, not a broader analysis like that provided by the independent review," Bowman said. "Now, with the benefit of more comprehensive evidence and analysis, we can see that the international bodies' work based on prior results was not justified."

The BCBS's mandate is to strengthen regulation and supervision practices worldwide with the purpose of enhancing financial stability, according to its charter published on the Bank for International Settlements' website. Similarly, the FSB was established to coordinate and promote effective regulatory, supervisory, and other financial-sector policies in the interest of global financial stability, per its charter.

To maintain their credibility, Bowman argued, these institutions must redouble their focus on material risks—those that affect safety and soundness or financial stability—while eschewing less valuable work that misdirects resources toward less valuable priorities. They must also seek to validate the data and analysis relied upon for international standards and regulations.

"Simply accepting data and analysis without rigorous validation risks building international standards on flawed foundations, potentially undermining both the effectiveness of regulations and the credibility of these critical institutions," she said. Refocusing action on issues of material harm, she added, will allow these institutions to remain true to their core mandates and serve a more valuable purpose in fostering supervisory modernization.

Conclusion

Bowman concluded that as the Federal Reserve continues to modernize supervision and regulation, and as it works with international colleagues through the FSB and the BCBS, supervisors "must have the humility to continually reevaluate the effectiveness of our own supervisory processes." She said efforts should continue to assess whether supervisory work is keeping pace with a rapidly changing ecosystem, including how organizations are structured to allocate authority and prioritize risks, and how supervisory intensity is tailored and staff equipped to quickly move from identifying a material vulnerability to taking appropriate action.

"The financial system will continue to evolve rapidly," Bowman said. "Our supervisory institutions must evolve with it." A critical measure of whether modernization succeeds, she added, will be whether supervisors are able to identify the risks that matter and act decisively at the point when their actions can have the greatest impact.

Bowman noted that the views expressed in the speech are her own and are not necessarily those of her colleagues on the Federal Reserve Board or the Federal Open Market Committee.