The top banking regulator at the US central bank has said he will step down from his role early, citing the “risk of a dispute” as Washington prepares for a new administration.
Michael Barr, who had called for stricter oversight after a series of bank failures in 2023, has been a target of Republicans but had previously rejected suggestions he resign before his term ends in 2026.
Mr Barr said he would remain on the board of the Federal Reserve, but in a reduced role.
It clears the way for President-elect Donald Trump to appoint someone new, albeit from the Fed’s existing board, to the supervisory position, which was created to improve bank oversight after the financial crisis.
“The risk of a dispute over the [vice president for supervision] position could be a distraction from our mission” Mr Barr said in his announcement, which did not name Trump.
“In the current environment, I’ve determined that I would be more effective in serving the American people from my role as [Fed board] governor.”
In announcing his plans, Mr Barr joins other Washington officials who have pre-emptively announced their resignation ahead of Trump entering the White House later this month.
Gary Gensler, the head of the Securities and Exchange Commission, previously announced his resignation, effective this month. His term was due to run until 2026 but Trump had vowed to fire him.
FBI director Chris Wray, who was also expecting to be replaced, last month also said he would step down before the new administration takes over – two years before the official end of his tenure.
Unlike those positions, governors of the Fed can only be removed from the board by the president “for cause” – a provision intended to help the bank maintain political independence.
But the rules are not clear when it comes to specific roles on the Fed board.
Mr Barr, who has faced criticism from Republicans over his support for stricter banking rules, had previously told Congress he intended to serve out the term in his supervisory role.
But Trump’s team had reportedly been considering maneovres which could have forced a legal battle over the question of presidential power over the Fed.
The Fed said his resignation was effective 28 February or when a successor is confirmed. The bank said it would not pursue new regulation until there is someone new in place.
Shares in major US banks headed higher after the news.
By BBC News
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