Top Fed bank cop steps aside, front-running potential Trump clash
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Michael Barr, vice chari for supervision. Photo: Al Drago/Bloomberg via Getty Images
The Federal Reserve's top bank regulator said he will resign from his leadership post while remaining on the Fed's board of governors, front-running a potential clash with President-elect Trump over whether he can be fired.
Why it matters: Some Trump allies have advocated trying to demote Michael Barr, who has pushed for sweeping new regulations on large banks, from the vice chair position.
- Barr's decision to leave the role voluntarily could prevent a legal clash over whether a president can do so.
Yes, but: The decision by Barr to remain on the Fed's seven-member board while relinquishing his leadership position means Trump is not scheduled to have any governor vacancies to fill until about a year into his term, potentially delaying his imprint on the central bank.
- Barr's term as a governor does not expire until 2032, and no other governor slots are scheduled to come open until January 2026, which complicates Trump's ability to install his own appointees.
What they're saying: "The risk of a dispute over the position could be a distraction from our mission," Barr said in a Fed press release issued Monday morning.
- "In the current environment, I've determined that I would be more effective in serving the American people from my role as governor," Barr said.
- Barr said in November he would not vacate his job even if Trump asked.
Of note: The Fed's press release said that "The Board does not intend to take up any major rulemakings until a vice chair for supervision successor is confirmed."
The intrigue: One option for Trump would involve Fed governor Michelle Bowman, a community banking expert whom he originally appointed to the central bank's board in 2018. She has been sharply critical of many of Barr's regulatory initiatives.
- Trump could either seek to elevate her to the vice chair for supervision position or ask her to take another job in his administration, vacating a Fed governor slot.
Between the lines: Trump has sent mixed signals over whether he might try to fire Fed chair Jerome Powell before his term is up in May 2026.
- Powell has said such a move would violate the law.
