The Federal Reserve’s top banking regulator, Michael Barr, announced his resignation on Monday, sidestepping what could have been a contentious standoff with the Republican-led Senate and the incoming Trump administration.
Why It Matters
Barr’s departure, set for February 28, comes amid heightened scrutiny from Senate Republicans and speculation over President-elect Donald Trump’s intent to intervene in his role.
Reports surfaced during the 2024 presidential campaign suggesting that Trump might seek to fire or demote Barr. However, Federal Reserve Chair Jerome Powell, speaking at a press conference in November, clarified that such actions would fall outside the legal powers of the presidency.
During Trump’s first term, tensions ran high between the administration and the Federal Reserve, especially as Trump frequently criticized rate hikes in 2018. He has even considered firing Powell, though many legal experts view such a move as beyond presidential authority.
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What To Know
In a letter addressed to President Joe Biden, Barr stated his intent to vacate his role as vice chair of supervision while remaining on the Federal Reserve’s Board of Governors.
The decision follows a tumultuous tenure marked by Barr’s push for stricter regulations on major U.S. banks, including JPMorgan Chase. Barr’s proposed measures sought to increase financial reserves for the nation’s largest financial institutions, drawing fierce opposition from both the banking sector and Republican lawmakers.
What People Are Saying
In his letter to Biden, Barr wrote: “I am writing to let you know that I intend to resign my position as vice chair for supervision effective February 28, 2025, or such earlier time as a successor is confirmed. I will continue to serve as a member of the Federal Reserve Board.”
He continued, “It has been an honor and a privilege to serve as the Federal Reserve Board’s vice chair for supervision, and to work with colleagues to help maintain the stability and strength of the U.S. financial system so that it can meet the needs of American families and businesses. I look forward to continuing to serve the American people as governor.”
President-elect Donald Trump made statements at the Economic Club of Chicago in October suggesting he’d considered dismissing Powell.
“I was threatening to terminate him, there was a question as to whether or not you could,” he said.
Trump has since stated he would let Powell complete his term, which ends in May 2026, though he also said he should “have the right to say (whether) I think you should go up or down a little bit” on interest rate adjustments.
What Happens Next
While Barr’s departure avoids direct conflict with Trump, the implications for banking oversight under the new administration remain unclear.
This article includes reporting from The Associated Press.
