President Joe Biden has nominated Michael Barr, one of the designers of the 2010 Dodd-Frank Act that overhauled the financial regulatory system, to serve as the Federal Reserve’s top banking regulator.
Barr previously served as assistant treasury secretary for financial institutions under former President Barack Obama and was one of the driving forces behind the regulatory changes following the financial crisis, including the creation of the Consumer Financial Protection Bureau, the agency established to monitor credit cards, mortgages, and other financial products used by consumers that has since become a top target of Republicans. Barr also served on the National Economic Council.
Barr, a Yale graduate and Rhodes scholar, currently serves as the dean of the University of Michigan’s public policy school. During the Clinton administration, he worked as Treasury Secretary Robert Rubin’s special assistant and later as deputy assistant secretary of the treasury for community development policy. He also spent some time as a special adviser to former President Bill Clinton.
Biden’s pick for the Fed’s vice chairman of supervision comes after Democrats failed to push his previous nominee, Sarah Bloom Raskin, across the finish line. GOP lawmakers argued that Raskin would use the Fed improperly to fight climate change and managed to get her to withdraw her nomination.
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“Barr has spent his career protecting consumers, and during his time at Treasury, played a critical role in creating both the Consumer Financial Protection Bureau and the position for which I am nominating him,” Biden said. “He was instrumental in the passage of Dodd-Frank to ensure a future financial crisis would not create devastating economic hardship for working families.”
The White House hopes that Barr’s nomination will be a less controversial pick than Raskin’s. He was even considered for the comptroller of the currency role, although he was passed over in favor of the more liberal Saule Omarova, who failed to garner the Senate’s approval and also withdrew her nomination.
Sherrod Brown, chairman of the Senate Banking Committee, released a statement on Friday morning praising Biden’s choice of Barr and emphasizing the need for the central bank to have a full and functioning board.
“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,” the Ohio Democrat said. “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.”
While Brown’s Republican counterpart, ranking member of the Senate Banking Committee Pat Toomey, didn’t say he expressly opposed the nomination, it was clear from a statement that his office released that Republicans will be pressing Barr on his past work during the Obama administration.
“Michael Barr has defended Dodd Frank’s big-bank bailout mechanism, which enshrined into law taxpayer bailouts of banks,” Toomey said. “He was also the primary author of the unconstitutional and unaccountable CFPB. For these and other reasons, I have concerns about his nomination, but I look forward to meeting and discussing these and other matters.”
Toomey was one of the key people opposing Raskin when she was nominated for the supervisory role. Republican lawmakers said she has advocated having the Fed allocate capital and choke off credit to disfavored industries, such as oil and gas. Raskin also faced questions about her work at a Colorado-based fintech company that had business before the Fed.
The GOP senators had pointed to her past writings as proof that she was too radical for the role, including when she suggested that financial regulators need to “re-imagine their own role so that they can play their part in the broader re-imagining of the economy.”
The nail in the coffin for Raskin was when centrist Joe Manchin, a West Virginia Democrat who is often the deciding vote in an evenly divided Senate, announced his opposition to her nomination. In choosing Barr, the White House is likely hoping to avoid having its nominee fail to get passed for being too far to the left.
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The central bank faces a critical challenge this year with the country’s explosive inflation. Consumer prices increased 8.5% in the 12 months ending in March, the fastest pace since 1981. The Fed is now working to rein in the higher prices by raising interest rates, although there is fear that doing so too aggressively might plunge the United States into a recession.
Biden has several other Fed picks that are awaiting Senate confirmation, including Fed Chairman Jerome Powell, a Republican who has garnered bipartisan support and was renominated by Biden to lead the central bank for a second term.
