Top Federal Reserve Bank Regulator Steps Down Amid GOP Pressure
Monday, Jan 6, 2025 11:44 am ET
The top banking regulator at the Federal Reserve, Michael Barr, has announced his resignation, effective February 28, 2025, or earlier if a successor is confirmed. Barr, who served as the vice chair for supervision since July 19, 2022, has been under fire from Republican lawmakers and the incoming Trump administration for his tough stance on bank regulations. His resignation comes as the Fed prepares to take up major rulemakings, including the Basel endgame rules, which have been broadly unpopular in the industry.

Barr's resignation is seen as a way to avoid a potential confrontation with the incoming Trump administration and Republicans in the Senate. In his letter to President Joe Biden, Barr cited the risk of a dispute over the position as a potential distraction from the Fed's mission. The Fed has announced that it will not take up any major rulemakings until a successor is confirmed, which could delay the implementation of new regulations or changes to existing ones.
The Basel endgame rules, in particular, have been a contentious issue. These rules, aimed at strengthening the financial system and preventing another crisis like the 2008 financial collapse, have been criticized by the banking industry as too onerous. With Barr's departure, there may be an opportunity for the industry to push for changes to these rules or for the Fed to take a more lenient approach.
Barr's resignation could also pave the way for a more bank-friendly replacement, who might be more open to revising or delaying these proposed rules. However, it is important to note that the Fed's regulatory approach is not solely determined by the vice chair for supervision, and other factors, such as the economic environment and political pressures, will also play a role in shaping the Fed's regulatory stance.
In conclusion, Barr's resignation as the top banking regulator at the Federal Reserve could have significant implications for the Fed's regulatory approach towards banks, particularly the largest ones. The delay in appointing a successor could lead to uncertainty in supervision and regulation, as well as potential delays in major rulemakings, such as the Basel endgame rules. The Fed's stance on these rules, and the broader regulatory environment, will depend on a variety of factors, including the views of the other members of the Fed's board of governors and the broader economic and political context.