It’s Barr — As MM foreshadowed earlier this week, former Treasury official Michael Barr is the pick for Federal Reserve vice chair for supervision, a surprisingly fast turnaround after Sarah Bloom Raskin withdrew her nomination for the same position just last month. President Joe Biden announced Barr’s selection in a statement this morning.
Barr is backed by Senate Banking Chair Sherrod Brown, and he has a good relationship with Sen. Elizabeth Warren. The question is whether any Democratic senators, bearing scars from Barr’s days as Treasury’s chief negotiator on the landmark Dodd-Frank Law, will do anything to block him (many of them are now gone). It’s possible he could pick up some Republicans, but MM has a hard time seeing any GOP senator actively putting him over the threshold for confirmation.
“Now more than ever, we need a full Fed Board — including a Vice Chair of Supervision,” Brown said in a statement. “The Vice Chair of Supervision plays a critical role in protecting our financial system and must prioritize strong financial regulation, and identify and stay ahead of risks to our economy. … Michael Barr understands the importance of this role at this critical time in our economic recovery.” The position, created by Dodd-Frank, also has pivotal say in regulatory issues involving climate, cryptocurrency and diversity.
Brown urged Republicans to “abandon their old playbook of personal attacks and demagoguery and put Americans and their pocketbooks first.”
One of Barr’s defining characteristics is his focus on consumer protection, which will mean he will have strong interest in topics like overdraft fees and the Community Reinvestment Act, the anti-redlining law. MM spoke to Barr last month after Raskin withdrew under pressure, and in retrospect we wish we would’ve asked him more pointed questions about capital and liquidity. But suffice to say, he is intimately familiar with all these topics.
Something you might not have noticed is that if Barr is confirmed, both of the vice chair positions at the Fed — the other soon to be held by Lael Brainard — will have been filled by top aides to former Treasury Secretary Tim Geithner, who isn’t exactly the most popular figure with the left these days. (It’s also a little funny, since Treasury is now run by a lot of departed Fed staffers, and this will continue the recent trend of the central bank being run by former Treasury officials).
In Biden’s own words: “Michael brings the expertise and experience necessary for this important position at a critical time for our economy and families across the country. … While I’m doing everything in my power to lower prices for families, the Federal Reserve plays a critical role in fighting inflation and Barr will make a strong Vice Chair [for] Supervision, joining my other nominees for the Federal Reserve that the Senate is considering.” He urged a swift confirmation for those other nominees: Fed Chair Jerome Powell, Brainard, Lisa Cook and Philip Jefferson.
“He understands that this job is not a partisan one, but one that plays a critical role in regulating our nation’s financial institutions to ensure Americans are treated fairly and to protect the stability of our economy,” the president said. “I will work with Senate Banking Committee Chair Sherrod Brown to move Barr’s nomination forward quickly.”