The Federal Reserve’s top banking regulator is set to resign next month, paving the way for President-elect Donald Trump to name a successor and averting a potential confrontation between the two.
Michael Barr is resigning from the position, formally known as Vice Chairman for Supervision, effective February 28, but he will remain a member of the Fed’s Board of Governors. His term as a Fed governor will last until 2026.
The announcement would ease the transition amid speculation that Trump may seek to replace Barr when he takes office on January 20, amid speculation that the new president wants someone more friendly to banks to fill the role.
Although he did not specifically address rumors that Trump would try to remove him, Barr said in a statement that “the risk of controversy in this position could distract from our mission. In the current environment, I am certain that I will be more effective as governor.” to serve the American people.
“I am deeply honored and privileged to serve as the Federal Reserve’s vice chairman for supervision and work with my 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,” he said. .
Bank stocks rose after the news. this SPDR Standard & Poor’s Bank Exchange-traded funds tracking industry leaders rose more than 1%.
CNBC.com has reached out to the Trump transition team for comment.
In a press release announcing the decision, the Fed noted that it would not make any major decisions on rules and regulations until a successor is appointed. The bank has been revising a new set of rules known as the Basel endgame, which are generally unpopular in the industry.
Since the Fed’s board of directors is limited to seven members, Trump will have to appoint someone from the current group to the new position.
The position was created in the wake of the 2008 financial crisis, which saw several high-profile names on Wall Street go bankrupt. Under Barr, the industry suffered a crisis in early 2023, when Silicon Valley Bank and a number of other banks failed, forcing the Fed to implement liquidity tools to prevent the problem from spreading.
Speculation has grown in recent days that Trump may seek to force Barr from office. one Reuters reports Barr said in late December that he was consulting with law firms about legal options if the president-elect takes action.
