After SVB, supervisors are retooling for speed

The Fed's own autopsy

Federal Reserve Vice Chair Michelle W. Bowman commissioned an independent review of the Silicon Valley Bank failure and the Federal Reserve's related supervision, and has now laid out its findings. The review's central claim: frontline examiners had identified SVB's interest-rate and liquidity risk at least nine months before the bank was taken into receivership — and nothing timely happened. SVB accumulated 54 matters requiring attention or immediate attention between 2019 and its failure, none of which addressed core financial risks. m:…5788

The review contradicts two popular stories. It determined that social media was not the primary cause of the run on SVB — correcting the earlier mischaracterization — and that statutory tailoring or regulatory changes were not the cause of the Fed's failure to act. The cause it names is internal: uncertainty about decision-making authority and a lack of clear accountability impeded timely decision-making at the Federal Reserve. It also takes aim at the post-failure narrative machine, saying international bodies like the BCBS and FSB relied unquestioningly on incomplete reports compiled shortly after the failure, with the April 2023 report by then-Vice Chair Barr used to justify additional regulatory work. These are the review's findings, as presented by Bowman — not settled consensus. The Fed's response so far: it is enhancing its supervisory decision-making framework to ensure direct allocation of responsibility and authority, and its Board published a Statement of Supervisory Operating Principles in the fall of 2025. m:…5788

The ECB's refocusing

Across the Atlantic, an ECB supervisor used a speech on "Effective supervision through timely remediation" to argue that simplification and effective supervision are not competing objectives. The practical agenda: a tiered approach to findings and measures implemented in 2025, and a refocusing exercise launching in mid-October 2026 to critically review the stock of accumulated supervisory measures — which had grown to around 12,000 across significant banks by the end of 2025. The ECB closed 1,200 more measures than it created in 2025, and low-severity F1 findings will in future be communicated as supervisory observations rather than generating corresponding measures, with mandatory internal-audit verification of remediation removed for low-severity internal-model findings. m:…0776

Fewer measures does not mean softer supervision. The speech says the ECB is making greater use of an escalation ladder of more intrusive tools when material weaknesses are not addressed in a timely manner, and that supervisors must set out ex ante a remediation path that addresses the root cause with clear final deadlines. The toolkit is explicit: capital requirements, qualitative measures, business restrictions, and periodic penalty payments. European banking supervision, the speech says, is increasingly placing effectiveness and timely remediation of findings at the centre of its dialogue with banks. m:…0776

Starting from health

Both retools begin from balance-sheet health, not crisis. The Central Bank of Cyprus reports the banking sector's NPL ratio fell to 1.5% at the end of July 2026 from 1.6% at the end of June, on the EBA Risk Dashboard methodology. The coverage ratio of NPLs with provisions stood at 64.5%, down slightly from 64.9%; total restructured loans were 0.7 billion euros, of which 0.3 billion are still classified as non-performing. m:…6026

This columnist's read — reasoning, not reported fact — is that both supervisors have decided the failure was speed and accountability, not the rulebook. The European answer is fewer measures but sharper ones, with clearer deadlines and a faster escalation ladder. What a banker weighs next: findings will land with ex ante deadlines and accountability attached, so the cost of letting a finding linger just went up on both sides of the Atlantic. m:…5788 m:…0776