The Federal Reserve’s top banking regulator Michael Barr will step down from his position in February but will continue to serve as a member of the central bank’s board of governors, according to a statement released by the central bank Monday.
“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,” Barr said in the statement.
The departure comes as the people in Donald Trump’s orbit are floating some dramatic ideas that would remake the way US banks are regulated during the next Trump administration, from deleting the CFPB to abolishing the FDIC.
There are lots of questions about whether any of the ideas, some of which would require acts of Congress, will come to pass.
But what is clear is that certain members of the new Trump administration are considering a different regulatory approach to the financial services industry as they look to remake the federal government and slash spending.
Barr has during his term clashed with the US banking industry over a new set of controversial capital rules proposed by Barr and other top bank regulators that would require lenders to set aside greater buffers for future losses.
The requirements are based on an international set of capital requirements known as Basel III imposed in the decade following the 2008 financial crisis.
Banks have been fighting this US proposal for the last year in an aggressive public campaign and even dropped hints about suing regulators if they don’t get their way.
They won a big victory in September when Barr and other regulators said they would water down those requirements. Some in the industry expect regulators to scrap the proposal if Trump wins.
Barr said in November he wouldn’t leave before his term was up even if Trump tried to fire him, echoing remarks made by Fed Chair Jerome Powell.
“As Chair Powell said, we serve fixed terms of office and I intend to serve my fixed term of office,” Michael Barr, the Fed’s vice chair for supervision, told lawmakers in November when asked what he would do if the president-elect wanted to remove him
Barr’s term as vice chair for supervision was scheduled to end in July 2026, and Powell’s term as chair ends in May 2026.
Barr’s term as a member of the Fed board of governors ends January 31, 2032.
The Washington Post last year reported that bank executives and former Fed officials expected Trump to demote Barr, who was a Joe Biden appointee and a Treasury official during the Barack Obama era. It is not clear that Trump would have the legal power to make such a move, the Post reported.
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