Biden nominates Michael Barr as Fed bank manager

Chairperson Joe Biden will nominate Michael Barr, a former Treasury Department official, as the Federal Reserve’s top regulator in charge of major banks.

Barr’s selection was expected after CNBC earlier this week confirmed that he was the White House frontrunner for the post. It would make the author of the leading financial law perhaps the most powerful American banking regulator: the Fed’s vice chair of oversight.

Barr served as Assistant Secretary of the Treasury for Financial Institutions during the Obama administration, where he helped design the Dodd-Frank Act of 2010. That law was one of the biggest overhauls of financial regulation. history of the United States and took place after the financial crisis of 2008-2009.

Among the many provisions intended to insulate the economy from future disaster, Dodd-Frank has brought in both the Consumer Financial Protection Bureau (CFPB) and the Fed’s Vice Chair for oversight.

“He was instrumental in eliminating Dodd-Frank, to ensure a future financial crisis does not cause severe economic hardship for working families,” Biden said in a statement. Friday morning with the official White House announcement.

“He understands that this job is not partisan, but one that plays a vital role in regulating our nation’s financial institutions to ensure Americans are treated fairly and protect the stability of our economy,” Biden added.

The president also highlighted the fact that Barr had the support of both Democrats and Republicans when he was previously confirmed by the Senate.

It may be a skewed acknowledgment of the difficulties the administration has faced in trying to promote some of its candidates for financial management positions in the Senate’s 50-50 split. .

Sarah Bloom RaskinBiden’s first choice to become the Fed’s banking regulator, withdrew her candidacy last month. She removed herself from consideration after West Virginia’s Joe Manchin, the most conservative Democrat in the Senate, said he would not support her nomination due to her views on climate change. and energy policy ideas.

Barr himself had last year considered Biden’s pick to run the Office of the Currency Calculator. But progressive Democrats, concerned about what they see as his close ties to Wall Street, rejected his candidacy.

The White House then selected Saule Omarova to replace Barr as the OCC leadership nominee until she was forced to withdraw in November is the result of skepticism from moderate Democrats Sensing Mark Warner in Virginia and Jon Tester in Montana.

In tapping Barr again, the White House is betting that Raskin’s retreat at Manchin’s hands will be enough to convince progressives – who may have liked Raskin – in favor of a more central choice.

Those Democrats will likely want Barr to disclose details of his previous work for fintech companies like Ripple Labs, a blockchain-based payments firm, to ensure he isolated from the interests of the company.

However, people familiar with White House thinking say that the president’s advisers believe they can convince the likes of Sen. Elizabeth WarrenD-Mass., who previously applauded Barr’s work in writing Dodd-Frank and founding the CFPB.

Moderate Democrats like Sen. Sherrod Brown of Ohio, chairman of the Senate Banking Committee, are seen as more reliable props for veterans of the Obama and Clinton administrations.

A Republican aide told CNBC that Barr is likely to get multiple votes from their ranks based on his work creating what many in the GOP see as overly burdensome financial regulations. masonry.

If confirmed for the Fed’s post, Barr would be put in charge of overseeing the nation’s largest banks, including JPMorgan Chase, Bank of America and Citigroup. The vice president of supervision oversees the safety of the country’s largest lenders by checking that they meet capital requirements, testing risk and requiring banks to stress test regularly.

Barr will also be a key voice on monetary policy as one of seven members of the Fed’s board of governors, who vote at every central bank meeting.

What did the Fed last month kick off? expected to be a series of rate hikes to help cool down irrational inflation. The Labor Department reported Tuesday that the price Americans pay up 8.5% in the 12 months ending in Marchhottest rate since 1981.

But imposing higher borrowing costs on the US economy is a daunting task in the best of times.

Economists, including the Treasury Secretary and former Fed Chair Janet YellenThe Fed will have to be careful not to roll back easy money policies too quickly, or risk US GDP growth in the face of ongoing supply chain constraints and the Russia-Ukraine war in the US. Europe.

“They have a dual mandate. They’re going to try to keep the labor market strong while keeping inflation down,” Yellen said of the Fed on Wednesday. “And it’s been done in the past. It’s not an impossible combination, but it will require skill and luck as well.”

With the exception of Barr, the White House has four candidates for the Fed before the Senate – Jerome Powell, Lael Brainard, Lisa Cook and Philip Jefferson.

Barr is currently dean of the University of Michigan’s school of public policy, a position he accepted after working for the Obama administration. During the Clinton administration, he served as a special assistant to Treasury Secretary Robert Rubin, a deputy assistant secretary of the Treasury, and a special adviser to President Bill Clinton.