Federal Reserve Vice Chairman for Oversight Michael Barr announced Monday amid speculation that President-elect Donald Trump could move to fire or demote him before his term ends in 2026. announced that he would resign.
Barr, who was appointed by President Joe Biden in 2022, said he would step down from his post on or before Feb. 28 but would continue to serve as a member of the Fed’s Reserve Board. According to Press release from the central bank. He stepped down from the nation’s top banking supervisory role. help It clears the way for President Trump to reform financial regulation and prevents potential legal battles if the next president moves to remove or demote him. (Related article: Jerome Powell suggests that an “influx” of immigrants is contributing to rising unemployment)
“It is an honor and privilege to serve as the Federal Reserve’s Vice Chairman for Supervision and work with my colleagues to maintain the stability and strength of America’s financial system to meet the needs of American families and businesses. ” Barr said in the release. “The position of Vice Chairman for Supervision was created after the global financial crisis to strengthen the Federal Reserve’s responsibility, transparency, and accountability for the oversight and regulation of the financial system.The risk of conflict over the position Our mission could be hindered. I have determined that I can serve the American people more effectively in the current environment.”
WASHINGTON, DC – April 14: Michael Barr, Federal Reserve Vice Chairman for Oversight (Photo by Jabin Botsford/The Washington Post via Getty Images)
.@Senator TimScott In response to Michael Barr’s announcement that he will resign as Vice Chairman of the Board of Governors of the Federal Reserve System, FedEx issued the following statement: pic.twitter.com/aSaFGl4V4n
— U.S. Senate Banking Committee Republicans (@BankingGOP) January 6, 2025
During his time as vice chairman, Barr overhauled banking regulations and pushed for interest rate hikes. Reserve requirements A 20% increase in the amount of cash that banks are legally required to keep on hand for banks with more than $250 billion in assets, followed by a much smaller 9% increase in regulations. Correct it to .
The proposed requirements, titled Basel III Endgame, are slated to increase borrowing costs, EJ Antoni, a researcher at the Heritage Foundation’s Grover M. Herman Center on the Federal Budget, previously reported for the Daily Caller News Foundation. He said that the regulatory changes would have the following impacts: Doesn’t address current problems in the banking system and disproportionately harms average Americans: “I think the burden of this regulation will fall disproportionately on individual borrowers and small businesses… What happens is that the credit becomes less profitable for the lender, so the only way the lender can actually offer credit at a higher interest rate is by paying more. Because you have to offset the additional cost with additional revenue, and that revenue obviously comes from interest on the loan, in effect, what you’re going to do is raise the cost of credit and all these different types. That means raising interest rates on credit, whether it’s mortgages, credit cards, or anything else.
In addition to Basel III, Mr. Barr oversaw a spate of regional bank failures in the spring of 2023, including Silicon Valley Bank, First Republic Bank and Signature Bank.
Amid rumors that the incoming White House would seek greater influence over the Fed, Barr sought legal counsel from the law firm Arnold & Porter in the weeks before leaving office. According to to Reuters.
Barr’s resignation comes after President Trump’s Treasury Secretary nominee, Scott Bessent, reportedly asked nominees for top Treasury positions whether they thought Barr could and should be demoted. It was done after. According to In the Washington Post. Unlike Barr, Trump has previously sought to reduce red tape for banks. sign A law enacted in 2018 raised the minimum asset threshold for banks to be considered “systemically important” and subject to various regulations from $50 billion to $250 billion.
Incoming Senate Banking Committee Chairman Tim Scott (South Carolina) wrote in the . post Barr’s resignation was announced on Monday. “From his supervisory failures during the spring 2023 bank failures to his disastrous Basel III endgame proposals, Michael Barr has failed to live up to the responsibilities of his position. “I stand ready to work with President Trump to ensure that this is done,” he said.
The company did not respond to requests for comment on the Federal Reserve and the transition to President Trump’s administration.
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