Federal Reserve Vice Chair for Supervision Michael Barr is stepping down from his role by next month to avoid a lengthy legal battle with the Trump administration. This departure ends his supervisory role roughly 18 months earlier than planned, removing a potential obstacle to President Donald Trump’s deregulatory agenda.
Trump now has two Republican Fed governors to choose from: Michelle Bowman or Christopher Waller. Bowman is considered the front-runner and has expressed her support for more industry-friendly reforms, which could benefit banks. A softer regulatory approach under Bowman may allow lenders to boost share buybacks and invest in mergers.
The early departure of Barr allows for a more industry-friendly official to take his place, benefiting U.S. banks that had been optimistic about Trump’s election. Bank stocks rose after the announcement, with Citigroup and Morgan Stanley being among the biggest gainers.
Barr is not resigning from his role as one of seven Fed governors, which preserves the current 4-3 advantage of Democrat appointees on the Fed board. This decision constrains the choices for his replacement to those currently serving on the board, maintaining a balance of power for future board votes.
Source: https://www.cnbc.com/2025/01/07/fed-michael-barr-clears-way-gentler-banking-regulator.html