The top banking regulator at the US central bank has announced his early resignation, citing the "risk of a dispute" as the new administration in Washington prepares to take office.
Michael Barr, who advocated for stronger oversight following a series of bank failures in 2023, has been a target of Republicans. He had previously dismissed suggestions of stepping down before his term expires in 2026.
Mr. Barr disclosed that he would continue serving on the Federal Reserve board but in a reduced capacity.
This move opens the path for President-elect Donald Trump to appoint a new individual, potentially from the Fed's current board, to the supervisory role aimed at enhancing bank regulation post the financial crisis.
"The risk of a dispute over the [vice president for supervision] position could detract from our mission," noted Mr. Barr in his announcement, which did not mention Trump.
"In the current circumstances, I have concluded that I could better serve the American people from my position as [Fed board] governor."
By sharing his intentions, Mr. Barr aligns with other Washington officials who have preemptively announced their resignations ahead of Trump's inauguration at the end of this month.
Gary Gensler, the chairman of the Securities and Exchange Commission, had previously declared his resignation, effective this month. Although his term was set to continue until 2026, Trump had pledged to dismiss him.
FBI Director Chris Wray, also anticipating replacement, had similarly stated his intent to step down ahead of the new administration taking charge, departing two years before his official tenure would conclude.
Federal Reserve governors can only be removed from the board by the president "for cause," a measure designed to uphold the bank's political autonomy.
Nonetheless, provisions are ambiguous concerning specific roles on the Fed board.
Mr. Barr, who has faced Republican criticism for his advocacy of stricter banking regulations, had assured Congress of his commitment to fulfilling his supervisory term.
However, reports suggested Trump's team had been contemplating strategies that might lead to a legal standoff concerning presidential authority over the Federal Reserve.
The Federal Reserve confirmed that Barr's resignation would become effective on February 28 or upon the confirmation of a successor. The bank stated it would refrain from introducing new regulations until a replacement assumes the role.
Following this news, shares in major US banks saw an increase.