Washington (AFP) – The US Federal Reserve’s top banking regulator announced his early resignation Monday, avoiding a confrontation with President-elect Donald Trump, who can now pick his replacement. Michael Barr, the Fed’s vice chair for banking supervision, said in a statement that he would step down from his management role by February 28 at the latest — around 18 months before his term was set to expire in July 2026.
Barr, who was nominated by outgoing President Joe Biden, stated that he will remain as a Federal Reserve governor, a role that gives him a permanent vote on the US central bank’s powerful interest rate-setting committee. That decision means Trump will have to pick his replacement from among the Fed’s current seven-strong board of governors — unless one of them chooses to voluntarily resign before their term expires.
“The risk of a dispute over the position could be a distraction from our mission,” Barr wrote in a letter to Biden announcing his resignation, which the Fed shared with reporters. “In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor,” he added.
Barr is only the second person to serve as Fed vice chair for supervision, a role created in the aftermath of the 2008 global financial crisis. His resignation paves the way for Trump to replace him with someone more in tune with his own views on banking regulation. His successor must be officially nominated by Trump after he takes office on January 20, and then confirmed by the Republican-controlled US Senate.
Whoever fills the post will likely favor a lighter touch when it comes to banking regulation and supervision. Barr’s biggest public critic from within the Fed has been Michelle Bowman, a Trump-nominated governor who has consistently opposed attempts at enacting tougher banking regulation. In a statement, the American Bankers Association said it respected Barr’s decision to leave and looked forward to “engaging with him” as he continues his role on the Federal Reserve’s governing board.
Some prominent Republicans on Capitol Hill used the opportunity to criticize Barr for his time as Fed vice chair. “Michael Barr has failed to meet the responsibilities of his position,” said Tim Scott, the most senior Republican on the Senate Banking Committee. “I stand ready to work with President Trump to ensure we have responsible financial regulators at the helm,” added Scott in a statement posted to the official X account for the Republicans on the committee.
Andy Barr, a Kentucky Congressman who served on the House Financial Services Committee, took to social media to call on Congress to abolish the role. “It is now time to amend the Dodd-Frank Act to eliminate altogether the position, which has become politicized and insulated from accountability,” he wrote in a post on his X account.
US banking stocks rose after Barr’s announcement, with the SPDR S&P Bank ETF, which tracks popular banking stocks, up 0.9 percent at around 2:30 pm local time in Washington (1930 GMT).
© 2024 AFP
