To avoid potential conflicts with the Trump administration, the Federal Reserve's Vice Chair for Bank Supervision has resigned
Michael Barr, the Vice Chairman for Bank Supervision at the Federal Reserve, will resign on February 28 to avoid potential conflicts with the Trump administration. He will continue to serve as a Federal Reserve Governor until 2026. Barr's resignation is seen as a move to ease tensions during the transition period, and bank stocks generally rose following the announcement. The Federal Reserve stated that no major decisions would be made before the new Vice Chairman takes office. During his tenure, Barr dealt with the banking crisis and promoted the establishment of liquidity tools
According to the Zhitong Finance APP, Michael Barr, the Vice Chairman of the Federal Reserve responsible for bank supervision, will resign from this position on February 28, clearing the way for a successor appointed by President Trump and avoiding potential conflicts between the two.
Although Barr will step down from the regulatory vice chairman position, he will continue to serve as a Federal Reserve Governor, with his term lasting until 2026. Following the announcement of Barr's resignation, speculation arose that Trump might attempt to replace Barr after taking office on January 20, a decision seen as helping to ease tensions during this transition period.
In his statement, Barr did not explicitly address rumors regarding Trump's plans to replace him but stated, "The controversy surrounding this position may distract from our mission. In the current environment, I believe that continuing to serve in the role of Governor will more effectively serve the American people."
He added, "It has been my honor and privilege to serve as the Federal Reserve Vice Chairman (Supervision) and to work with my colleagues to maintain the stability and strength of the U.S. financial system to meet the needs of American families and businesses."
Following the announcement, bank stocks generally rose. The SPDR S&P Bank ETF, which tracks leading companies in the banking industry, increased by more than 1%.
The Federal Reserve noted in a statement that no significant decisions regarding rules and regulations will be made before the new vice chairman takes office. Currently, the banking industry is undergoing a revision of a new set of rules known as the Basel Endgame, which has been widely controversial in the industry.
Due to the limit of seven members on the Federal Reserve Board, Trump will need to select a successor from the existing members to fill this position.
The Vice Chairman (Supervision) position was established after the 2008 financial crisis when several large financial institutions on Wall Street collapsed. During Barr's tenure, the banking industry experienced a crisis in early 2023, with several banks, including Silicon Valley Bank, failing, forcing the Federal Reserve to establish liquidity tools to prevent the crisis from spreading.
Recently, rumors have circulated that Trump might force Barr to step down. According to a Reuters report in December 2023, Barr had consulted legal options regarding potential actions Trump might take. Trump's team has not commented on this news