Fed Nominee Michael Barr Has Pressed to Reverse Trump-Era Banking Policies

WASHINGTON — Former Treasury Department official Michael Barr is expected to pursue closer scrutiny of the financial system and reverse some Trump-era policies if he wins confirmation as a banker. head of the Federal Reserve.

Barr, who served in the Obama administration, is expected to face the Senate Banking Committee in a confirmation hearing on Thursday, a setback to a four-year term as Deputy The Fed chair is in charge of oversight. If confirmed by the Senate, he will become the most influential US financial manager and have a voice on monetary policy.

He will produce a list of President Biden’s appointees to the central bank. Fed Chair Jerome Powell and three other central bank appointments have been confirmed in recent weeks.

Randal Quarles, who previously served as a Fed supervisor, focuses on simplifying financial regulations.


Photo:

Zach Gibson / Bloomberg News

Barr, 56, dean of the department of public policy at the University of Michigan, has records that suggest he may seek to reinstate at least some of the fiscal rules that have been relaxed by the Fed under the Trump administration.

Randal Quarles, a former Fed supervisor, focused on simplifying financial regulations enacted after the 2008-09 financial crisis, moves that advocates say have helped clarify or better calibrate the central bank’s rules but some Democrats say has greatly reduced the impact of the Street Rule Wall.

Mr. Barr said in June 2020: “We need to repair the damage caused by the past four years of policy, in part referring to Trump-era policies to reduce capital and cash management requirements. different from the major U.S. lenders.

The Biden administration hopes Mr. Barr will win support from both progressive and moderate Democrats.

President Biden’s first candidate for the Fed’s top spot, Sarah Bloom Raskin, withdrew from consideration in March after Sen. Joe Manchin (D., W.Va.) said he could not supported the nomination, citing her views on tackling climate change. His vote was crucial in the 50-50 Senate with the Republicans’ unanimous opposition to Ms. Raskin.

On Tuesday, Mr Manchin said he planned to support Mr. Barr, after a private meeting with him last week. It is not known whether Mr. Barr will receive any Republican support. Pennsylvania Senator Pat Toomey, a ranking GOP member on the Senate Banking Committee, said last month that he had concerns about Mr. Barr about his involvement in the Dodd-Frank financial overhaul.

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Michael Barr was the Treasury Department’s assistant secretary for financial institutions during the Obama administration.


Photo:

Andrew Harrer / Bloomberg News

Mr. Barr was last year a candidate to become controller of the currency, another top banking position, before skepticism from progressives thwarted that bid. The White House’s final choice for that role, Saule Omarova, has withdrawn after opposition from moderate Democrats, and the position has yet to have a confirmed Senate appointment.

Some of the progress has raised concerns about Mr. Barr’s previous work for tech-finance firms Ripple Labs Inc. and LendingClub Corp.

, arguing that his relationship may conflict with his role as a manager. But Progressive Senator Elizabeth Warren (D., Mass.) has said she would support Mr. Barr and in a 2014 book described him as a hero for helping found the Human Financial Protection Bureau. consumption.

While Mr Barr’s approach may contradict Mr. Quarles’s, Mr. Powell has said that he often delays whoever becomes Mr. Quarles’ successor. “I respect that it’s the person who will set the regulatory agenda going forward,” Mr. Powell said in September.

Old friends and colleagues say that if Mr. Barr tries to change course at the Fed, they expect him to take a cooperative and pragmatic approach. A scholar known for his work on financial inclusion and consumer advocacy, Mr. Barr has had numerous jobs in the Treasury Department during the Clinton and Obama administrations, including as a lieutenant. to then-Treasury Secretary Timothy Geithner. Mr. Barr acted as the architect of the 2010 Dodd-Frank financial overhaul.

He co-authored a book on financial regulation and wrote a 2012 book, “No Slack,” which argues that lower-income individuals often don’t have access to this type of translation. financial services that middle-income families take for granted.

Analysts said they expect Mr. Barr to likely pursue relatively modest steps to ramp up bank stress tests, rather than making wholesale revisions to the annual exercise to check see if the big lenders can weather a severe recession.

Similarly, Mr. Barr is not expected to spend time reviewing moves to ease compliance with the Volcker rule, a Dodd-Frank requirement that restricts banks from transacting unless it acts on behalf of clients. row.

“Volcker is a political headache that stands in the way of real work,” said Steven Kelly, a research associate at the Yale Program on Financial Stability.

An early test of Mr. Barr’s approach could come from how he proposes to treat Treasuries and bank deposits held at the central bank according to capital requirements known as rates. additional leverage. The Fed allowed a pandemic-related temporary expiration of capital last year, but promised to propose a broader amendment to its super-secure asset handling rule. It has not done so yet.

Senior Democrats such as Senate Banking Committee Chair Sherrod Brown (D., Ohio) and House Financial Services Committee Chair Maxine Waters (D., California) have said that any Any extension of the bailout would be a mistake, undermining the post-crisis regulatory regime. Republicans and banks often push for an extension.

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Edmund DeMarche

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