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Michael Barr is stepping down as Wall Street's top executive but will remain as governor of the Federal Reserve, the US central bank announced on Monday.
Barr will leave his role as vice chairman of the board at the end of February, ending a four-year term that began in July 2022. He will serve as governor until that term expires in January 2032, meaning there will be no term. a new post on the seven-member board of governors.
Barr said in a statement that he was stepping down because of concerns that “the risk of conflict over the position could be a distraction.” FedThe goal is to protect the US financial system.
“In the current situation, I am determined that I will be more successful in serving the American people from my role as governor,” he said.
His decision comes just before Donald Trump returns to the White House. The president-elect has vowed to loosen regulations in his second term, and his advisers are considering a demotion for Barr.
With Barr remaining as Fed governor, Trump will have to choose a new vice chairman for oversight from the current group of governors. They include officials such as Christopher Waller and Michelle Bowman, both of whom Trump chose for their jobs during his first term as president. Bowman in particular has emerged in recent years as a staunch opponent of many of Barr's proposed legislative reforms.
The Fed on Monday said it would not take “significant legislation” until a successor is confirmed by the Senate.
Since Barr assumed the top management role in the US government and promised to impose tougher rules on major lenders, the Fed has faced intense legislative pressure from banking groups. Some of those groups filed lawsuit in December against the central bank over its stress testing framework, which aims to identify vulnerabilities in certain organizations during times of economic or financial stress.
The Fed was already considering what it described as “significant changes” to the stress tests in order to reduce volatility about the results and make the process more transparent. Changes could include adjusting the models that calculate estimated losses for banks, averaging results over two years to reduce the risk of year-to-year changes, and allowing the public to comment on projected scenarios each year before they are finalized.
Earlier this year, Barr was by force revising his landmark proposal to raise capital requirements for lenders such as JPMorgan Chase and Goldman Sachs. A bipartisan group of US lawmakers, chief executives of major banks and activists have launched a fierce opposition campaign against the implementation of the so-called Basel III Endgame – the final rules tied to an international effort to boost the sector after the 2008 financial crisis.
In September, Barr unveiled new proposals that would halve the increase in capital requirements to 9 percent for the largest US banks, compared to 19 percent initially.
Barr said in his resignation letter to US President Joe Biden that it has been “an honor and a privilege to serve as vice chairman of the Federal Reserve Board's oversight, and to work with his colleagues to help maintain the stability and strength of the US financial system.” so that it can meet the needs of American families and businesses”.