The Federal Reserve’s top banking regulator plans to step down in late February.
Michael Barr, the central bank’s vice chair for supervision, is due to leave Feb. 28, the Fed said in a news release Monday (Jan. 6).
Barr’s departure announcement comes two weeks before President-elect Donald Trump is set to take office. While the announcement does not mention the new president by name — or speculation that Trump would try to remove Barr — it does note that”the risk of a dispute over the position could be a distraction from our mission.”
Barr, who had been in his position since 2022, announced his plans to step down in a letter to President Joe Biden, saying it had been an honor “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.”
The Fed said it does not plan to tackle “any major rulemakings” until Barr’s successor is confirmed. The announcement noted that Barr’s role included working with other financial regulators to make sure “the banking system remained a source of strength, despite stresses in early 2023.”
Barr and other financial regulators had told the House Financial Services Committee last year that they would pause issuing new banking rules until after Trump took office. Those regulators had been harshly criticized by the committee’s Republican leadership.
“It’s clear our banking regulators, under Democrat leadership, have been busy fighting the last war,” then-committee chair Rep. Patrick McHenry, R-N.C., said during a hearing in November. “Time and again, your agencies have also worked to stifle the beneficial role that innovation and technology play in our financial system.”
Trump campaigned on the idea of ushering in the “most aggressive regulatory reduction” in U.S. history, with the incoming-president’s supporters lobbying for agencies such as the Consumer Financial Protection Bureau (CFPB) and the Federal Deposit Insurance Corporation (FDIC) to be either eliminated or scaled back.
As PYMNTS wrote last month, such moves would mark a major shift, particularly after a year marked by “a steady drumbeat of regulations and rules” dealing with everything from credit card late fees to data sharing.
“In the meantime, however, the underlying issues are still there, and key among them will be examinations of the risks and rewards inherent in bank-FinTech partnerships, cybersecurity, capital requirements and innovation,” that report said.
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