From CNBC: 2025-01-07 08:36:38

Federal Reserve Vice Chair for Supervision Michael Barr plans to step down from his role early to avoid a legal battle with the Trump administration. His departure clears the way for a more industry-friendly official, potentially impacting bank regulations and deal activity. Barr’s resignation could shape future bank oversight policies.

The departure of Michael Barr has ignited speculation about potential changes in bank regulations under the Trump administration. Barr’s early exit opens the door for a new top financial regulator, setting the stage for possible industry-friendly reforms and regulatory shifts. The move could impact bank stress tests, merger approvals, and confidential exams.

The Basel III Endgame, a proposal to increase capital requirements for large banks, may see a gentler approach under new leadership at the Federal Reserve. Barr’s replacement could lead to a more industry-neutral rule, potentially allowing banks to allocate more capital to share buybacks and other uses. Bank stocks rose after Barr’s announcement, signaling investor optimism.

Barr’s resignation as Vice Chair for Supervision maintains the current balance of power on the Federal Reserve board. His departure allows for a new appointee to potentially implement different regulatory strategies, impacting bank operations and deal activity. The change in leadership could shape the future of bank regulations and oversight.

Read more: Fed’s Michael Barr clears way for gentler banking regulator