The Federal Reserve’s top banking regulator is set to resign next month, clearing the way for President-elect Donald Trump to name his successor and avoid a potential conflict between the two.
Michael Barr’s resignation, officially known as vice chairman for oversight, will take effect on February 28, but he will remain a member of the Fed’s board of directors. His term as Fed director will continue until 2026.
There had been speculation that Trump would seek a replacement for Barr after he takes office on January 20, but the latest announcement comes amid speculation that the new president would like to replace him with someone more pro-banking. The announcement will ease that transition.
Barr did not specifically address rumors that President Trump would seek to remove him from office, but said, “The risk of a dispute over the position could distract from our mission. I have decided that I must do my part,” he said in a statement. My role as Governor will allow me to serve the American people more effectively. ”
“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. ”’ he said.
Bank stocks rose following the announcement. of SPDR S&P Bank Exchange-traded funds (ETFs) that track industry leaders rose more than 1%.
CNBC.com has reached out to Trump’s transition team for comment.
In a release announcing the decision, the Fed said it would not make any major decisions regarding rules or regulations until a successor is named. The bank is in the process of revising a new set of rules known as the “Basel Endgame” that were widely unpopular within the industry.
The Fed’s board membership is limited to seven members, so President Trump would need to nominate someone from the current membership to the new position.
This position was created after the 2008 financial crisis, when several big-name Wall Street companies collapsed. Under Mr. Barr’s watch, the industry witnessed the collapse of Silicon Valley Bank and several other banks in early 2023, forcing the Fed to implement liquidity facilities to prevent the problem from spreading.
Speculation has been mounting in recent days that Mr. Trump might try to oust Mr. Barr from office. Reuters reported in late December that Barr was consulting with a law firm about his legal options if the next president took action.
