Michael Barr to resign as the Fed's chief banking supervisor to avoid conflict with Trump.

• The Federal Reserve's top banking regulator, Michael Barr, will resign on February 28, but will remain as governor.
• It was rumored that President-elect Donald Trump could replace Attorney General Bill Barr once he is inaugurated on January 20.
• Barr stated that the potential conflict over the role could divert our focus from our objective.

The Federal Reserve's top banking regulator will depart next month, allowing President-elect Donald Trump to appoint a successor and avoiding a possible conflict between the two.

Speculation that Trump might replace Barr after taking office Jan. 20 will be eased by the announcement that the new president wants someone who is more bank-friendly to take the role.

Barr's resignation from the position of vice chair for supervision, which is formally called the vice chair for supervision, takes effect as of Feb. 28. However, he will continue to serve as a governor on the Fed board until 2026.

Barr stated that he would be more effective in serving the American people as governor rather than getting involved in a dispute over his position, which could be a distraction from their mission, even though he did not specifically mention the rumors about Trump attempting to remove him.

He stated that it was an honor and privilege to serve as the Federal Reserve Board's vice chair for supervision and to collaborate with colleagues in maintaining the stability and strength of the U.S. financial system to meet the needs of American families and businesses.

The exchange-traded fund that tracks the banking industry's leaders experienced a gain of over 1% following the announcement.

The Fed stated that it will not make any significant decisions on rules and regulations until a successor is appointed. The bank has been working on a new set of rules, known as the Basel endgame, which has been widely criticized in the industry.

Trump will have to appoint someone from the current group to the new position since the Fed is restricted to seven board members.

The 2008 financial crisis led to the creation of a position, and in early 2023, under Barr's leadership, the industry experienced another crisis with the collapse of Silicon Valley Bank and other big names, prompting the Fed to implement a liquidity facility to prevent the issues from spreading.

There have been reports that Trump may try to remove Barr from his position. According to a Reuters report from December, Barr was consulting with a law firm about his legal options if the president-elect took action.