US Fed’s top banking regulator to step down early to avoid legal fight with Trump
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Mr Michael Barr is stepping down by Feb 28 at the latest – before his term was set to expire in July 2026.
PHOTO: REUTERS
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WASHINGTON - The US Federal Reserve’s top banking regulator announced his early resignation on Jan 6, avoiding a confrontation with President-elect Donald Trump who can now pick his replacement.
Mr Michael Barr, the Fed’s vice-chairman for banking supervision, said in a statement that he will step down from his management role by Feb 28 at the latest – before his term was set to expire in July 2026.
Mr Barr, who was nominated by outgoing Democratic President Joe Biden, said 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 his or her term expires.
“The risk of a dispute over the position could be a distraction from our mission,” Mr Barr wrote in a letter to Mr 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.
Mr Barr is only the second person to serve as Fed vice-chairman 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.
Mr Barry’s successor must be officially nominated by Trump after he takes office on Jan 20, and then confirmed by the Republican-controlled US Senate.
Whoever fills the post will likely favour a lighter touch when it comes to banking regulation and supervision.
Mr Tim Scott, the most senior Republican on the Senate Banking Committee, said: “Michael Barr has failed to meet the responsibilities of his position.”
“I stand ready to work with President Trump to ensure we have responsible financial regulators at the helm,” added Mr Scott in a statement posted on the official X account for Republicans on the committee.
Mr Barr’s biggest public critic from within the Fed has been Ms Michelle Bowman, a Trump-nominated governor who has consistently opposed attempts at enacting tougher banking regulation.
US banking stocks rose after Mr Barr’s announcement, with the SPDR S&P Bank ETF, which tracks popular banking stocks, up by around 1.9 per cent at 12.20pm. AFP
