On Monday, January 6th, the Federal Reserve announced that Michael Barr will resign from his role as Vice Chairman for Supervision, but he will continue to serve as a Board member.
Barr will step down from his role as Vice Chairman for Supervision at the end of February. He was nominated by President Biden and began his four-year term in July 2022. He will continue to serve as a Board member until the end of his term in January 2032. The Federal Reserve Board has a total of 7 seats, and Biden has appointed 5 of them.
In a statement, Barr cited concerns about “the risk of position controversy potentially distracting” from the Federal Reserve’s goal of safeguarding the U.S. financial system.
“In the current environment, I have decided to serve the American people more effectively in the role of a Board member,” he said.
His decision was made before Donald Trump returned to the White House. Trump had vowed to cut regulations during his second term. Reports suggest that Trump’s advisors are considering demoting Barr.
Barr previously served as the Deputy Treasury Secretary for Financial Institutions in the Obama administration and helped design the Dodd-Frank Act in 2010.
The full name of the Dodd-Frank Act is the “Dodd-Frank Wall Street Reform and Consumer Protection Act.” The Act covers a wide range of areas and is the most significant financial reform since the Great Depression in the 1930s.
Since Barr took on the top regulatory role at the Federal Reserve and pledged to impose stricter regulations on large banks, the Fed has faced significant legal pressure from banking lobbying groups. Some of these groups filed lawsuits against the central bank in December 2024 over its stress testing framework, which aims to identify vulnerabilities of specific institutions during economic or financial stress.
Currently, the Federal Reserve is considering “significant changes” to the stress testing to reduce the volatility of outcomes and make the process more transparent.
With Barr continuing as a Board member at the Federal Reserve, Trump will have to choose a new Vice Chairman for Supervision from the current Board members. He will have to wait until at least January 2026 when the term of the next Board member ends to appoint a new one.
The Federal Reserve stated on Monday that it will not establish any “major rules” until the successor is confirmed by the Senate.