According to an announcement by the Federal Reserve Board on Monday, Barr (Michael Barr) will resign as Vice Chair for Supervision on February 28, or earlier if a successor is confirmed, but he will continue to serve as a Fed Board Member.
In the Fed's announcement, Barr hinted that his decision to resign proactively was to avoid potential controversies with the incoming Trump administration.
"The position of Vice Chair for Supervision was established after the global financial crisis to create greater accountability, transparency, and oversight for the Federal Reserve's supervision and management of the financial system." Barr wrote, "The controversy risk associated with this position could distract us from our mission. In the current environment, I believe serving the American people as a Board Member would be more effective."
Jaret Seiberg, a financial policy analyst at investment bank TD Cowen, believes that Barr's decision to step down may be a troubling sign of the continued politicization of banking regulation. "When the White House changes parties, agency heads typically remain in place. But that's no longer the case, meaning banks should expect greater policy changes every time the White House changes hands."
Barr had some background related to cryptocurrency before his appointment, including serving as an advisor to Ripple. However, during his tenure, he had a significant impact on how the traditional financial system interacts with cryptocurrencies, which has been a mixed bag for the crypto industry. Barr had pushed for the Fed to have the authority to regulate and enforce rules on stablecoin issuers, but many Republican lawmakers expressed dissatisfaction with this.
In a statement on Monday, Republican Senator Tim Scott of South Carolina criticized Barr for "regulatory failures" during the 2023 bank collapse events and the "disastrous Basel III Endgame proposal" released that same year. He stated:
"Mike Barr has failed in his duties, and I am ready to work with President Trump at any time to ensure we have responsible financial regulators at the helm."
However, according to Seiberg, Barr's resignation is unlikely to bring about significant changes in the short term, as the Democrats will still hold a majority on the Federal Reserve until early 2026. Seiberg stated that if Trump wants to quickly replace Barr, he may be forced to nominate a successor from within the board.
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