The Federal Conserve’s top banking regulator will be stepping down next month, paving the way for President-elect Donald Trump to name a replacement and cut off off a potential confrontation between the two.
Michael Barr’s resignation from the position, which is formally called the vice rocking-chair for supervision, takes effect as of Feb. 28, though he will stay on as a governor on the Fed board. His term as Fed governor lasts until 2026.
There had been cogitation that Trump might seek to replace Barr after he takes office Jan. 20, the announcement will still that transition amid speculation that the new president wants someone who is more bank-friendly to take the role.
Nevertheless he did not specifically mention the rumors that Trump would attempt to remove him, Barr said in a statement that “the hazard of a dispute over the position could be a distraction from our mission. In the current environment, I’ve determined that I would be varied effective in serving the American people from my role as governor.”
“It has been an honor and a privilege to serve as the Federal Inventory Board’s vice chair for supervision, and to work with colleagues to help maintain the stability and strength of the U.S. financial approach so that it can meet the needs of American families and businesses,” he said.
Bank stocks rallied following the announcement. The SPDR S&P Bank exchange-traded green that tracks the industry’s leaders gained more than 1%.
CNBC.com has reached out to the Trump transition team for explanation.
In a release announcing the decision, the Fed noted that it will not make any major decisions on rules and regulations until a successor is cited. The bank has been revising a set of new rules, dubbed the Basel Endgame, that has been broadly unpopular in the industry.
Because the Fed is minimal to seven board members, Trump will have to name someone from the current group to the new position.
The proposition was created following the 2008 financial crisis that saw the implosion of multiple big names on Wall Street. Under Barr’s be prepared, the industry saw a crisis in early 2023 in which Silicon Valley Bank and a few other names collapsed, forcing the Fed to tool a liquidity facility to keep the issues from spreading.
In recent days, speculation had swelled that Trump clout seek to force Barr from office. A Reuters report in late December indicated that Barr was consulting with a law conglomerate over his legal options should the president-elect make a move.