President Biden will nominate Michael Barr, who played a crucial role shaping Wall Street oversight after the Great Recession, to be the Federal Reserve’s top banking cop, in a second attempt to fill the vacancy after Republicans thwarted Biden’s initial pick.
“He was instrumental in the passage of Dodd-Frank, to ensure a future financial crisis would not create devastating economic hardship for working families,” Biden said in a statement Friday. “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.”
If confirmed, Barr would take on the role, known as the vice chair for supervision, during a crucial time for Fed policymaking. Inflation has soared to its highest levels in 40 years, and the central bank has launched a massive effort to slow down the economy without causing a recession. And while banking oversight hasn’t been the focal point of the covid economy, Democrats have long urged for a regulator who would restrengthen rules that were gradually loosened by President Donald Trump’s pick for the job.
The role may sound wonky beyond regulatory circles, though in recent months the job has become a flash point between Democrats and Republicans who are tussling over the bounds of Wall Street oversight.
Biden previously nominated Sarah Bloom Raskin, a former Fed governor with an expertise on climate change and its threat to financial stability. Republicans were quick to oppose her candidacy, saying climate change is well beyond the Fed’s economic mandate.
Democrats still hoped to confirm Raskin by a slim majority. But her path was effectively doomed after GOP lawmakers boycotted a vote to move her nomination forward after questioning her time on the board of a firm that got access to a Fed payments system. Raskin withdrew her nomination in March.
Barr joins a slate of Biden nominees awaiting confirmation as multiple spots on the Fed’s seven-seat board sit vacant. The president has renominated Fed Chair Jerome H. Powell to a second term and selected governor Lael Brainard as the Fed’s vice chair. Biden also named economists Lisa Cook and Philip Jefferson to spots on the Fed board. Votes are expected on those nominees later this month.
Barr’s nomination comes after he was thrust into a fight between Democrats over who should fill a different regulator role. Last year, he was considered to be the leading contender for comptroller of the currency, which carries significant influence over banking institutions. But his potential nomination met aggressive opposition from liberal groups who claimed he was too moderate. Barr was never nominated and the Office of the Comptroller of the Currency still does not have a confirmed director.
Though Raskin was largely seen as the favorite for the Fed job among liberals, they are unlikely to oppose Barr. Her withdrawal made clear to Biden and congressional Democrats that they would face an uphill battle if they did not name someone more moderate as a replacement.
Democrats may have to part with some of their climate priorities on financial regulation. But they remain focused on restrengthening rules on Wall Street and have indicated they found their match in Barr.
“At a time when working families are dealing with rising prices while corporate profits continue to soar, this job is vital to ensuring the economy works for everyone,” Sen. Sherrod Brown (D-Ohio), chair of the Banking Committee, said in a statement. “Michael Barr understands the importance of this role at this critical time in our economic recovery.”