Michael Barr Didn’t Want Legal Battle for Fed Job, Even If He Could Win
(Bloomberg) -- Michael Barr says his choice to step down from his role as vice chair for supervision came down to the calculus that even winning a fight with the incoming Trump administration to stay would be a loss for the Federal Reserve.
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“This was a very tough decision for me,” Barr told Bloomberg News in an interview, adding that he became concerned staying would be a distraction for the institution.
“At the end of the day I would, according to my counsel and to the general counsel of Fed, prevail on any legal merits if this came to litigation,” he said. “But even if it didn’t come to litigation, or if it did come to litigation that prevailed, it would be just a huge distraction, and that didn’t seem to me to be a prudent way of proceeding.”
President-elect Donald Trump has faced questions over whether he may try to influence the Fed. Barr, who is often criticized by Republicans, was viewed as a potential target for the incoming administration.
The surprise announcement on Monday is a reversal from comments in November, when he told lawmakers that he planned to serve his full term. Asked about what has changed since then, Barr said he had more time over the holidays to reflect about “the practicalities” of staying.
Barr’s departure further clouds the future of a landmark bank-capital proposal. He has been a key figure in negotiations for that plan, which would force the country’s largest lenders to hold more capital to buffer against losses and a financial crisis.
Barr is set to step down from the role on Feb. 28, unless a successor is confirmed earlier. He plans to continue to serve as a member of the Fed’s board of governors.
“I moved the ball down the field on capital, on long-term debt, on liquidity, on multiple scenarios for stress testing. But what happens in the future for policy in this space? I’m not going to predict or guess or prioritize what the new vice chair should work on,” Barr said.
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