Political stoush as new probe blames SVB collapse on Fed’s own regulators

By the Editorial Team · Tuesday, September 22, 2026

A Federal Reserve investigation led by Michelle Bowman found that regulators under the Biden administration could have anticipated and prevented Silicon Valley Bank’s 2023 collapse but failed to act on known risks. The report has fueled political contention within the Fed and government, highlighting divisions over regulatory responsibility and raising questions about leadership accountability moving forward.

A recent Federal Reserve inquiry into the 2023 collapse of Silicon Valley Bank (SVB) has found that Fed bank supervision staff during the Biden administration could have foreseen and prevented the bank’s failure, according to Michelle Bowman, the Fed’s current head of bank supervision. Bowman, appointed by former President Donald Trump, shared preliminary findings from a report she commissioned at an event in London. The report indicated that as early as a year before SVB’s collapse, Federal Reserve regulators “knew, or should have known” about the buildup of risks at the bank but did not act promptly to address them.

The findings have stirred controversy within the Fed and beyond, with some officials expressing discomfort over the report’s conclusions. Concerns have arisen that the White House might use the report to justify the removal of Michael Barr, Bowman’s predecessor and a Biden appointee who remains a member of the Fed’s board of governors. On the same day Bowman revealed the report’s findings, the White House issued a sharp rebuke of Barr, holding him responsible for lapses in oversight that contributed to SVB’s failure.

The report and the reactions it has elicited reflect a growing partisan divide. White House spokesperson Kush Desai criticized Barr for allegedly failing in his regulatory duties, while Senator Elizabeth Warren, the senior Democrat on the Senate Banking Committee, accused Bowman of wasting taxpayer funds on an inquiry designed to absolve her from responsibility.

Bowman, who previously voted in favor of a 2019 rule easing capital and liquidity requirements for banks the size of SVB, defended the new report’s conclusion that largely assigns blame to the bank’s executives and shifts away from blaming regulatory rollbacks. This contradicts Barr’s 2023 report, which tied SVB’s failure in part to the loosening of regulatory standards implemented in 2019 under a law signed by former President Trump.

Both reports agree that SVB collapsed under the weight of unrealized losses on its securities portfolio that the bank’s management failed to manage effectively. They also highlight a risk-averse supervisory culture at the Fed, which delayed decisive action. Barr’s report pointed to regulators’ reluctance to intervene without “ironclad assessments,” while Bowman’s investigation similarly cited a cautious culture within Fed supervision that hampered timely responses.

Barr resigned as the Fed’s chief bank regulator in 2025 shortly before Trump’s second inauguration, a move intended to avoid a conflict over potential presidential authority to remove him. Bowman was appointed last year to succeed him and has advocated rolling back some of the post-2008 financial crisis regulations she and other Trump-era officials consider overly burdensome.

The ongoing debate over the causes of SVB’s collapse underscores the challenges the Federal Reserve faces in balancing effective bank oversight with political pressures amid evolving regulatory philosophies.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.