Michael Barr, the U.S. Federal Reserve’s vice chair for supervision, will step down from his place on Feb. 28 — or earlier, if a successor is confirmed — in response to a Monday announcement from the Federal Reserve.
Barr will proceed to function a member of the Federal Reserve Board of Governors.
In an announcement included within the Federal Reserve’s announcement, Barr steered that he determined to voluntarily resign as a way to keep away from a possible dispute with the incoming Trump administration.
“The position of vice chair for supervision was created after the Global Financial Crisis to create greater responsibility, transparency, and accountability for the Federal Reserve’s supervision and regulation of the financial system,” Barr mentioned. “The risk of a dispute over the position could be a distraction from our mission. In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.”
According to Jaret Seiberg, a financial policy analyst at TD Cowen, Barr’s decision to step down is a potentially worrisome sign of the continuing politicization of banking regulation. In an analyst note to clients on Monday, Seiberg wrote, “Agency chiefs used to stay when the White House changed parties. That is no longer the case, which means banks should expect bigger policy swings each time the White House changes control.”
The Federal Reserve’s vice chair of supervision functions as the top banking watchdog and is considered one of the most important regulatory roles in the U.S. In his position, Barr had a heavy influence on how the traditional financial system interacted with cryptocurrencies.
Though Barr had some crypto bona fides before his appointment, including serving as an advisor to Ripple, the issuer of the XRP token, his tenure has been a mixed bag for the crypto industry. Barr has pushed for the Federal Reserve to have the power to regulate and enforce the law against stablecoin issuers in the U.S., which many Republican lawmakers have taken issue with.
In a Monday statement, Sen. Tim Scott (R-South Carolina) blasted Barr’s “supervisory failures” in the course of the financial institution failures of 2023 and the “disastrous Basel III Endgame proposal” issued the identical yr.
“Michael Barr has failed to meet the responsibilities of his position,” Scott mentioned. “I stand ready to work with President Trump to ensure we have responsible financial regulators at the helm.”
In line with Seiberg nevertheless, Barr’s resignation is unlikely to vary a lot within the brief time period, as Democrats will proceed to have a majority on the Federal Reserve till early 2026. If Trump needs to interchange Barr rapidly, Seiberg mentioned, he’ll possible be compelled to appoint a successor from throughout the Board of Governors.
“The logical candidate is Michelle Bowman,” Seiberg wrote. “She is a former Kansas banking commissioner who also worked at a community bank. And she has been at the Fed since late 2018. She also often speaks on bank policy and has been critical of Barr’s approach to Basel 3 Endgame.”
Talking on the DC Blockchain Summit final yr, Bowman careworn the significance of “regulatory openness” to innovation and new applied sciences.
