Bloomberg News
Hoping to avoid a legal battle with the incoming Trump administration, Michael Barr, the Federal Reserve’s vice chair for supervision, will relinquish his role as the central bank’s chief regulator by the end of next month.
The resignation amounts to a swift reversal for Barr, who as recently as a few weeks ago, insisted that he would finish his term as vice chair — which is set to end next summer — even if it meant a legal battle with the White House. Instead, he will vacate the position on Feb. 28, unless a successor is confirmed sooner.
In his letter of resignation, which was submitted to President Joe Biden on Monday morning, Barr said he was concerned that a legal battle would be too disruptive to the Fed. Yet, he will not relinquish his seat on the Fed Board of Governors.
“The risk of a dispute over the position could be a distraction from our mission,” Barr wrote. “In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.”
The announcement comes two weeks before President elect Donald Trump is set to be sworn into office.
Since Trump’s victory in the November general election, questions have swirled about whether he would attempt to remove Barr from office, with lawyers and scholars split on whether the president would have the legal authority to do so. Some in Trump’s orbit have also advocated for removing Fed Chair Jerome Powell from his leadership position.
Both Powell and Barr were adamant in the wake of the election that they would not bow to pressures to step down. In an interview with American Banker late last year, Barr said the institution felt it was important to safeguard the Senate-confirmed leadership roles at all costs.
“It’s not about me. It’s about what is right for serving the American public,” Barr said. “And I feel very strongly — as does Chair Powell, as does the institution — that the independence of the Federal Reserve is critical for that.”
In stepping down voluntarily, Barr and the Fed avoid the matter being tested in court.
Once Barr vacates the vice chair position, Trump will be able to nominate a replacement. This will likely entail elevating a current board member — with Gov. Michelle Bowman, a frequent voice of dissent to Barr’s regulatory proposals, being the most natural candidate — or waiting for a governor seat to open up. The next scheduled vacancy will arise on Jan. 31, 2026, when Gov. Adriana Kugler’s term expires.
In relinquishing his title of vice chair, Barr will no longer be able to set the Fed’s regulatory agenda, but he will still have a say on regulatory policy via his vote on the board. Likewise, he will maintain his seat on the Federal Open Market Committee, the central bank’s monetary policy arm.
Barr’s term on the Board of Governors expires in early 2032, though few governors stay for the entirety of their term. The median term of office for a Federal Reserve Governor is just over five years, according to an analysis by the Brookings Institution.
In his resignation letter, Barr described his time in the position of vice chair for supervision as “an honor and a privilege.”
