'Michael Barr, who said 'I'm not quitting,' steps down from Fed Vice Chair position

Steps down from position but continues as Fed Board Member

"Unrelated to Jerome Powell's position"

The U.S. Federal Reserve (Fed) announced on the 6th (local time) that Michael Barr, the Vice Chair for Supervision, will step down from his position. However, he will continue to serve as a Fed Board Member, a term that lasts until 2032.

Barr has served as the Vice Chair for Supervision since July 2022, implementing stringent financial regulatory policies, including strengthening capital regulations for large banks. The banking sector strongly opposed the regulatory tightening, and key figures in the next administration, such as Scott Besant, the nominee for Treasury Secretary, also criticized it. There were speculations inside and outside Wall Street that President-elect Donald Trump might undermine the Fed's independence by stripping Barr of his bank supervision authority.

However, Barr testified before the United States Congress after the U.S. presidential election last November, stating, "I will fulfill my duties until the end of my term." Last month, he even consulted a law firm to explore legal responses to potential pressure from President-elect Trump.

Ultimately, Barr announced in a statement that "the controversy surrounding the Vice Chair for Supervision position could hinder the Fed's mission," and he decided that it would be more effective to serve as a Fed Board Member under the current circumstances.

The Wall Street Journal (WSJ) analyzed that Barr's decision to resign as Vice Chair does not imply Jerome Powell's resignation as Fed Chair. Powell has also repeatedly expressed his determination not to resign, even under pressure from the incoming Trump administration.

Reporter Hyunil Lee hiuneal@hankyung.com