Michael Barr will resign as head of the Fed’s banking supervision to avoid a clash with Trump
The Federal Reserve’s top bank regulator is stepping down next month, opening the way for President-elect Donald Trump to name a replacement and a potential showdown between the two.
Michael Barr’s resignation from his role as vice chairman for oversight is effective Feb. 28, although he will remain on the Fed’s board as a governor. His position as governor of the Fed lasts until 2026.
There had been speculation that Trump might seek to replace Barr after he takes office on Jan. 20, an announcement that would ease the transition amid speculation that the new president wants someone more bank-friendly to fill the role.
While not specifically addressing rumors that Trump would try to remove him from office, Barr said in a statement that “the risk of controversy over the position could distract us from our mission. In the current environment, I have determined that I would be more effective in serving the American people in my role as Governor.”
“It is an honor and a privilege to serve as Deputy Comptroller of the Federal Reserve Board and to work with my colleagues to help maintain the stability and strength of the U.S. financial system so it can meet the needs of American families and businesses. ” he said.
Bank stocks rose after this announcement. The SPDR S&P Bank the exchange-traded fund, which tracks industry leaders, gained more than 1%.
CNBC.com has reached out to Trump’s transition team for comment.
In a statement announcing the decision, the Fed said it would not make any major decisions about rules and regulations until a successor is named. The bank is revising a set of new rules, dubbed the Basel endgame, which is widely unpopular in the industry.
Because the Fed’s board is limited to seven members, Trump will have to name one of the current group for the new position.
The position was created in the wake of the 2008 financial crisis that saw many big names imploding on Wall Street. Under Barr’s watch, the industry saw a crisis in early 2023 that saw the collapse of Silicon Valley Bank and several other names, forcing the Fed to introduce a liquidity tool to prevent problems from spreading.
Speculation has grown in recent days that Trump may try to oust Barr. A Reuters reports in late December, Barr indicated that the president-elect was consulting with a law firm about his legal options should he make a move.