On Monday, January 6, the Fed announced that Vice Chair for Supervision Michael Barr is stepping down from that appointment but will remain on the Board of Governors.
Barr was confirmed as a Governor on July 19, 2022 to an unexpired term through January 31, 2032. He was confirmed to a four-year term as Vice Chair for Supervision on the same day for a term which would have run through mid-July 2026.
Barr remaining as a Governor is atypical but allowed by law. In his letter to President Biden, Barr said, “It has been an honor and a privilege to serve as the Federal Reserve Board’s vice chair for supervision, and to work with colleagues to help maintain the stability and strength of the U.S. financial system so that it can meet the needs of American families and businesses,” Vice Chair for Supervision Barr said. “The position of vice chair 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. The risk of a dispute over the position could be a distraction from our mission. In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.”
Barr’s resignation will take effect as of February 28, 2025. The position of Vice Chair of Supervision was created as part of the Dodd-Frank Act in response to the financial crisis in 2008. However, the position was not filled until Barr was nominated and confirmed in 2022. The position requires the holder to be a Governor of the Fed. At this writing, the Board has a full complement of Governors. Therefore, if a nomination were put forward, it would have to be from among Christopher Waller, Michelle Bowman, Lisa Cook, or Adriana Kugler.
As Biden-era appointments, Cook and Kugler are unlikely candidates. Bowman is an appointee from the first Trump administration. She holds the seat for a community bank that was designated in the Dodd-Frank Act. Waller is also an appointee from the first Trump administration. Absent a vacancy coming up among the Fed governors, the choice is either to leave the position of Vice Chair for Supervision unfilled, or to nominate Waller or Bowman, Waller being the more likely of the two.
However, given comments from president-elect Trump and those expected to be nominated for his administration, it is entirely possible that the position will be allowed to remain vacant.
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