Michael Barr, vice chairman of supervision at the US Federal Reserve, will leave his position on February 28 (or sooner, if a successor is confirmed), according to an announcement from the Federal Reserve on Monday.
Barr will remain a member of the Federal Reserve Board of Governors.
In a statement included in the Federal Reserve’s announcement, Barr suggested that he decided to voluntarily resign to avoid a potential dispute with the incoming Trump administration.
“The position of vice president for supervision was created after the global financial crisis to create greater responsibility, transparency and accountability for the Federal Reserve’s supervision and regulation of the financial system,” Barr said. “The risk of a dispute over the position could distract us from our mission. “In the current environment, I have determined that I would be most effective serving the American people in my role as governor.”
According to Jaret Seiberg, financial policy analyst at TD Cowen, Barr’s decision to resign is a potentially worrying sign of the continued politicization of banking regulation. In an analyst note to clients on Monday, Seiberg wrote: “Agency heads tended to stick around when the White House switched parties. “That is no longer the case, which means banks should expect greater policy changes whenever the White House changes control.”
The vice chairman of supervision of the Federal Reserve serves as the main banking watchdog and is considered one of the most important regulatory functions in the US. In his position, Barr had a major influence on how the traditional financial system interacted with the cryptocurrencies.
Although Barr had some cryptocurrency bona fides prior to his appointment, including serving as an advisor to Ripple, the issuer of the XRP token, his tenure has been a mixed bag for the cryptocurrency industry. Barr has pushed for the Federal Reserve to have the power to regulate and enforce against stablecoin issuers in the US, which many Republican lawmakers have disagreed with.
In a statement Monday, Sen. Tim Scott (R-S.C.) criticized Barr’s “oversight failures” during the 2023 bank failures and the “disastrous final Basel III proposal” issued the same year.
“Michael Barr has failed to fulfill the responsibilities of his position,” Scott said. “I stand ready to work with President Trump to ensure we have responsible financial regulators at the helm.”
However, according to Seiberg, Barr’s resignation is unlikely to change much in the short term, since Democrats will still have a majority on the Federal Reserve until early 2026. If Trump wants to replace Barr quickly, Seiberg said, he will likely will be forced to appoint a successor within the Board of Governors.
“The logical candidate is Michelle Bowman,” Seiberg wrote. “She is a former Kansas bank commissioner who also worked at a community bank. And he has been at the Federal Reserve since late 2018. He also speaks often about banking policy and has criticized Barr’s approach to ending Basel 3.”
Speaking at last year’s DC Blockchain Summit, Bowman highlighted the importance of “regulatory openness” to innovation and new technologies.
