The Senate easily approved Michael Barr to be the Federal Reserve’s top banking regulator in a bipartisan vote Wednesday.
Barr, a former top Treasury official under President Barack Obama, is the last of President Joe Biden’s three nominees to the Fed’s board of governors to win Senate confirmation. All seven seats on the Fed’s board are now filled, for the first time in roughly a decade, as the central bank tackles the worst inflation in 40 years.
The Senate voted 66-28 to approve Barr to serve as vice chair for supervision, the government’s primary financial regulator.
As a Treasury official, Barr helped design the 2010 Dodd-Frank financial regulations after the devastating 2008 financial crisis. He most recently was the dean of the University of Michigan’s Gerald R. Ford School of Public Policy.
During his Senate confirmation hearing, Barr pledged to support the Fed’s efforts to reduce inflation and said he would promote “clear rules” to govern financial innovation
Barr received mostly mild questioning and faced little of the strong opposition that sank Biden’s first choice for the post, former Deputy Treasury Secretary Sarah Bloom Raskin.
Raskin ran into unanimous disapproval from Senate Republicans and from West Virginia Democratic Sen. Joe Manchin. 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 sought to play down the Fed’s role regarding climate change, saying that its “authorities here are important, but quite limited, quite narrow.”
The Fed “should not be in the business of telling financial institutions to lend to a particular sector or not to lend to a particular sector,” he said.
Barr also echoed concerns outlined in a recent Fed report on financial stability by noting that stablecoins carry “run risk,” or the risk that they will collapse in value as holders of the coins, which are often pegged to the dollar, seek to cash in their coins all at once. If the coin issuer doesn’t have sufficient assets to redeem them, investors can lose money.
Congress and financial regulators should “wrap their arms around those financial stability risks, and regulate so that we don’t have situations where people are holding an asset that they believe is a cash instrument, but it actually is not,” Barr said.
There has been only one other vice chair for supervision, Randal Quarles, whose term ended in January. Quarles drove several changes to financial regulation during his term that drew criticism from progressives. They argued that, among other moves, Quarles took steps that reduced the capital that banks are required to hold to ensure they remain solvent. Still, the banks overall emerged from the COVID pandemic in solid financial shape.