Federal Reserve Vice Chairman Michael Barr has avoided a potential battle with President-elect Donald Trump over his position, raising questions about the future of a landmark bank capital proposal. He plans to resign from his position to take up the challenge.
The U.S. central bank said on Monday that Barr is preparing to step down on February 28 unless a replacement is confirmed early. He will continue to serve as a member of the Federal Reserve Board of Governors.
“The position of Vice Chairman for Supervision was created in the wake of the global financial crisis to strengthen the Federal Reserve’s responsibility, transparency, and accountability for the oversight and regulation of the financial system,” Barr said in a statement. said. “The risk of conflict over status could distract us from our mission.”
bar said in november Asked what he would do if President Trump tried to remove him from office, he said he intended to serve out his term. His term as vice chair for oversight was scheduled to end in July 2026.
bank capital proposal
Barr’s resignation further clouds the future of U.S. regulators’ proposal to require the nation’s largest financial institutions to hold significantly more capital in case of losses or financial crisis.
The KBW Bank Index rose as much as 2.4% to its highest intraday since Dec. 16 after the Federal Reserve announced William Barr’s resignation.
Bank stocks rise as PM Barr’s departure fuels optimism for deregulation
Barr is a key player in negotiating the proposal, which is aimed at preventing future bank failures and financial crises. The financial industry is currently actively campaigning against new requirements for the largest U.S. banks, including Citigroup, JPMorgan Chase & Co. and Goldman Sachs Group Inc., to raise their capital by 19%.
In September, he previewed proposed changes that would reduce that increase to 9%. The amendments drew opposition from at least three of the five directors of the Federal Deposit Insurance Corporation, according to Bloomberg News.
read more: Fed’s accommodative bank capital plan faces bipartisan FDIC pushback
Federal Reserve’s Chief Banking Superintendent
Barr, a former senior Treasury official who played a key role in enacting the Dodd-Frank Act in 2010, received bipartisan support when he was confirmed to become vice chair for oversight in 2022. .
As the Fed’s chief banking regulator, Barr increased day-to-day oversight of the nation’s largest financial institutions in an effort to strengthen the Biden administration’s crypto policies and climate action. During his tenure, he also strengthened enforcement and oversight of major banks.
Sen. Tim Scott, the top Republican on the Senate Banking Committee, criticized the bank capital proposal and Barr’s actions during the local banking crisis, according to a statement.
Scott said he was ready to work with President Trump to ensure “responsible financial regulators are at the helm.”
— Written by Katanga Johnson (bloomberg news)
