The Federal Reserve’s top banking regulator will step down next month, clearing the way for President-elect Donald Trump to name a replacement and averting a potential confrontation between the two.
Michael Barr’s resignation from his role, formally called vice chairman for oversight, is effective Feb. 28, although he will remain as a governor on the Fed’s board of directors. His term as head of the Fed will last until 2026.
There has been speculation that Trump could try to replace Barr after he takes office on January 20. The announcement will ease that transition amid speculation that the new president wants someone more bank-friendly to fill the role.
While he did not specifically address rumors that Trump would try to remove him, Barr said in a statement that “the risk of controversy over this position could distract us from our mission. my role as governor would be more effective in serving the American people.”
“It has been an honor and privilege to serve as Vice Chairman of the Federal Reserve Board and to work with colleagues to help maintain the stability and strength of the U.S. financial system so it can meet the needs of American families and businesses. “, he said.
Bank shares rose after this announcement. SPDR S&P Bank An exchange-traded fund that tracks industry leaders gained more than 1%.
CNBC.com has reached out to Trump’s transition team for comment.
In a statement announcing its decision, the Fed said it would not make any major decisions on rules and regulations until a successor is named. The bank is reviewing a series of new rules, dubbed the “Basel endgame”, which have proven extremely unpopular within the industry.
Since the Fed is limited to seven board members, Trump will have to appoint someone from the current group to the new position.
The position was created in the wake of the 2008 financial crisis, which led to the collapse of several big names on Wall Street. Under Barr’s watch, the industry suffered a crisis in early 2023 that collapsed Silicon Valley Bank and several other companies, forcing the Fed to create a liquidity facility to keep problems from spreading.
Rumors have intensified in recent days that Trump may try to remove Barr from office. A Reuters report reported in late December that Barr was consulting with a law firm about his legal options should the president-elect take action.