Michael Barr Confirmed by Senate as Fed’s Vice Chair of Supervision

Mimi Nguyen Ly
By Mimi Nguyen Ly
July 14, 2022Businessshare
Michael Barr Confirmed by Senate as Fed’s Vice Chair of Supervision
Michael Barr testifies at the Senate Banking, Housing, and Urban Affairs at the U.S. Capitol in Washington on May 19, 2022. (Tasos Katopodis/Getty Images)

The U.S. Senate has voted to confirm Michael Barr as the vice chairman of supervision at the Federal Reserve, one of the most important financial regulatory roles in the country, amid rising interest rates and the worst inflation in four decades.

The Senate on Wednesday morning voted 66–28 to approve Barr, a former Obama administration official, as a member of the Federal Reserve’s Board of Governors.

Later in the day, the chamber separately voted 66–28 to confirm his four-year term as the Federal Reserve’s vice chairman of supervision—the point person related to bank regulation. More than a dozen Republicans joined Democrats in supporting Barr’s confirmation.

“Today’s confirmation of Michael Barr as Vice Chair for Supervision of the Federal Reserve is important progress for my plan to tackle inflation and for sound oversight as we transition to steady and stable growth,” President Joe Biden said in a statement on Wednesday.

The vote comes as inflation in the United States accelerated to 9.1 percent for the 12 months ending in June—the highest level in four decades—topping the market estimate of 8.8 percent and last month’s annual rate of 8.6 percent.

Responsibilities

Barr, who is currently listed as the dean of the University of Michigan’s Gerald R. Ford School of Public Policy, previously served in the Treasury Department during the Obama administrations.

Under President Barack Obama, he served as assistant secretary for financial institutions and was a chief negotiator during the drafting of the Dodd-Frank Act, a multi-pronged 2,300-page legislation Congress passed in 2010 that created the vice chair for supervision position.

The financial reform legislation sought to prevent another financial crisis like in 2008, in part by establishing a range of financial safeguards that prevents the kind of risk-taking that led to the crisis, and encouraging more bank regulation and supervision.

“The Vice Chairman for Supervision shall develop policy recommendations for the Board regarding supervision and regulation of depository institution holding companies and other financial firms supervised by the Board, and shall oversee the supervision and regulation of such firms,” states the legislation (pdf).

The role involves overseeing several of the largest banks in the United States, including JPMorgan, Chase, Bank of America, and Citigroup.

The post had been left vacant since October 2021, when Randal Quarles, who was appointed by Trump in 2017, finished his four-year term. With Barr joining, the central bank now has a full seven-member governing board for the first time since 2013. Barr will fill the unexpired 14-year-term as Fed Governor ending Jan. 31, 2032, after Quarles left the board in December 2021.

Barr is also a Yale graduate and Rhodes scholar who previously clerked for Justice David Souter on the Supreme Court. He also served during the Clinton administration in the Treasury Department, the State Department, and the White House.

Statements to Senate

During a Senate hearing in May, Barr pledged to support the Fed’s efforts to reduce inflation and said he would promote “clear rules” to govern financial innovation, telling members of the Senate Banking Committee: “I strongly believe that inflation is far too high today and I’m committed to bringing it down to the Federal Reserve’s target of 2 percent.”

He also said during the hearing that Congress and financial agencies should regulate stablecoins, a form of cryptocurrency often pegged to the dollar, to protect consumers from sharp drops in their value. Barr has some cryptocurrency background after having served on the advisory board at Ripple Labs from 2015 to 2017.

Barr was nominated in April after Sarah Bloom Raskin, Biden’s first choice for the position, withdrew from consideration on March 15 following opposition from Senate Republicans and Sen. Joe Manchin (D-W.Va.). They argued that she would go too far to weigh the impact of climate change as part of the Fed’s regulatory authority and possibly discourage banks from lending to oil, gas, and coal companies.

Barr has said that the Fed’s role regarding climate change is “important, but quite limited, quite narrow,” adding that the central bank “should not be in the business of telling financial institutions to lend to a particular sector or not to lend to a particular sector.”

Sen. Pat Toomey (R-Pa.), the ranking Republican on the Senate Banking Committee, announced in a statement in June that he believes Barr is qualified to serve in the role “based on his prior government service and distinguished career focused on financial services and regulation.”

“While I disagree with Professor Barr on a number of policy issues, he has pledged to fight the record high inflation that’s hurting American families,” Toomey said. “He has also publicly acknowledged that the Fed does not have the authority to, nor should it, allocate credit or use its regulatory powers to accelerate the transition to a lower carbon economy.

“Importantly, in our conversations and in written correspondence, Professor Barr has strongly committed to promote transparency and accountability at the Fed, including the regional Reserve Banks.”

The Associated Press contributed to this report.

From The Epoch Times

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