Probative Inquiry into the
2023 Financial Sector Stress Events

Preliminary Report: Public Exposure Draft

At the beginning of this year, Starling Advisory Group was retained by the US Federal Reserve Board’s Division of Supervision & Regulation to conduct an independent Probative Inquiry into the Financial Sector Stress Events of 2023, including the failure of Silicon Valley Bank (“SVB”), and the supervisory lapses that may have contributed to those events.

Starling was retained to: (1) conduct an independent Probative Inquiry into any lapses in supervision that may have contributed to SVB’s failure; (2) to test the reliability of the established public narrative regarding that failure; (3) to produce an Independent Expert Review setting forth the understandings and conclusions that our Probative Inquiry supports; and, based thereupon, (4) to articulate Recommendations for Reform in supervisory practice if any supervisory lapses evident in 2023 are to be avoided going forward.

This Preliminary Report presents the initial findings of that ongoing work, drawing on interviews with current and former senior Federal Reserve officials and supervisory staff as well as an extensive review of public and confidential documentary evidence.

Accompanying the Public Exposure Draft as Addenda are:

• A glossary of terms referenced within the report;
• A brief description of the structure of the Federal Reserve’s Division of Supervision & Regulation;
• A detailed timeline of the supervision and governance of SVB in the years leading up to its failure;
• And a statement from the Independent Directors of SVB. 

Also appearing as Addenda are two detailed studies, prepared by independent experts with Charles River Associates, commissioned by Starling to examine: (1) what vulnerabilities at SVB were evident to market participants in the few years immediately prior to its failure — vulnerabilities that should therefore have been evident to the bank’s supervisors, given their access to far more granular, non-market information; and (2) whether an analysis of posts on Twitter in the period immediately prior to the failure of SVB supports the assertion that social media fueled the run on the bank. 

The report is being released as a Public Exposure Draft to invite review, challenge, and informed public comment as our Probative Inquiry continues. At Starling’s discretion, valuable feedback will inform our ongoing efforts, shape our future reports, and contribute to the important public good towards which we aim.

Download the Public Exposure Draft

Register for a free Observer account to download the Preliminary Report of Starling’s Probative Inquiry into the 2023 Financial Sector Stress Events here.

What Comes Next

Starling is conducting additional interviews and gathering artifacts to inform an Interim Probative Inquiry Report later this year and a Final Report in early 2027. This will be followed by the Independent Expert Review and Recommendations for Reform in Q2.

Share Your Thoughts

If you have comments, suggestions, relevant documents, or other information that you believe would be helpful to this ongoing Probative Inquiry, we welcome your thoughts. You may contact us using the form below or at [email protected]. Please indicate in your message if you wish to remain anonymous. 

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