Federal Reserve’s top financial regulator to resign

Michael Barr, the Federal Reserve’s top financial regulator, announced his resignation as vice chair for supervision effective February 28th, amid potential conflicts with the incoming Trump administration and Senate Republicans.

Barr’s resignation allowed him to avoid a confrontational situation with the government and Senate, although he will continue to serve on the Fed’s board of governors until 2032.

Driving the news: During his tenure, Barr proposed stringent regulations for large U.S. banks, aiming to increase their financial reserves significantly. This proposal faced intense opposition from major financial institutions like JPMorgan Chase and criticism from Senate Republicans.

• Earlier reports indicated that former President Trump had considered firing or demoting Barr, but Federal Reserve Chair Jerome Powell clarified that such actions are beyond the president’s legal authority.

The big picture: By choosing to step down as vice chair but remain as governor, Barr limited the options for the Trump administration to replace him, as all seven seats on the Fed’s board of governors were occupied until 2026.

• Barr’s involvement in addressing bank failures, including the Silicon Valley Bank collapse, led to a proposal for stricter rules for banks with $100 billion in assets or more, requiring higher capital reserves.

What they’re saying: “The risk of a dispute over the position could be a distraction from our mission,” Barr said in a statement. “In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.”