Michael Barr, the top banking regulator at the U.S. central bank, announced he will step down early from his role, citing concerns over the “risk of a dispute” as Washington transitions to a new administration.
Barr, who had advocated for tighter banking regulations following a series of failures in 2023, had been a Republican target but had previously dismissed calls to resign before his term was set to end in 2026. Despite stepping down from his supervisory position, Barr will remain on the Federal Reserve’s board in a reduced capacity.
This decision paves the way for President-elect Donald Trump to appoint a new supervisor from the existing Fed board, a role established after the financial crisis to strengthen banking oversight. Barr emphasized that his resignation was meant to avoid distractions, stating, “The risk of a dispute over the (vice president for supervision) position could be a distraction from our mission. I believe I can better serve the American people in my role as Fed board governor.”
Barr’s announcement aligns with other preemptive resignations ahead of Trump’s presidency.
Gary Gensler, head of the Securities and Exchange Commission, recently announced his resignation effective this month, despite his term running until 2026, after Trump vowed to fire him.
Similarly, FBI Director Chris Wray, anticipating replacement, declared he would step down two years early.
While Federal Reserve governors are protected from removal except “for cause,” the rules are less clear regarding specific roles on the board. Barr, who had earlier pledged to complete his term, faced potential legal challenges from Trump’s team regarding presidential authority over the Fed.
The Fed stated that Barr’s resignation would be effective February 28 or upon the confirmation of a successor. Until then, the central bank will refrain from pursuing new regulations. Following the news, shares in major U.S. banks rose.
