US Senate confirms Barr as Fed vice-chair

The US Senate confirmed Michael Barr to a four-year term as the Federal Reserve’s vice-chair for supervision on July 13, and separately appointed him as a member of the board of governors for a term ending in 2032. This is the first time since 2013 the board of governors has had no vacancies.

The Senate approved Barr’s nomination to both offices by a 66–28 margin. Opposition senators cast all 28 no votes, but some of their colleagues voted for confirmation.

In a statement, US president Joe Biden said that Barr’s confirmation “is important progress for my plan to tackle inflation and for sound oversight as we transition to steady and stable growth”.

With Barr’s confirmation, four of the seven members of the board of governors are Democratic appointees. At the beginning of this year, the only Democrat on the board was Lael Brainard, who was appointed a governor by then-president Barack Obama. The Senate confirmed her as vice-chair earlier this year.

Barr served in the Obama administration as assistant secretary of the Treasury for financial institutions between 2009 and 2010. He worked on the Dodd-Frank Act of 2010, which created the vice chair for supervision post.

A lawyer with degrees from Yale and Oxford, Barr held a clerkship with then-Supreme Court associate justice David Souter. He also worked at the Treasury and State departments during the Clinton administration.

He has been dean of the Gerald S Ford School of Public Policy at the University of Michigan since 2017. He is also a professor of law at the university.

Early in Biden’s tenure, media reports identified Barr as a likely nominee for the post of comptroller of the currency, overseeing the regulation of banks with national charters.

Barr’s potential candidacy divided Democrats. Some of them argued Barr had done too little to restrain banks’ investment activities while at the Treasury. Others believed Barr was too close to the fintech and cryptocurrency sectors, citing his stint as an adviser to crypto firm Ripple Labs between 2015 and 2017.

Biden ultimately nominated Saule Omarova, a Cornell University law professor, for the comptroller position in September. Republican opposition forced her withdrawal in December, and Biden has not advanced another candidate.

Stony path to confirmation

The vice-chair for supervision is charged with developing and overseeing supervision and regulation policy. The US president nominates the chairs, vice-chairs and members of the board of governors, subject to Senate confirmation. The chairs and vice-chairs all serve renewable four-year terms.

In his confirmation hearings, Barr said he wanted to focus on liquidity and capital-adequacy regulations. He also stressed the need for central bank independence and observed that inflation is “too high”.

The post of vice-chair for supervision has remained vacant since October, when Randal Quarles’s term ended. Biden first nominated former Fed governor Sarah Bloom Raskin to succeed Quarles.

Republicans in the Senate objected to Raskin, claiming that she would use her Federal Reserve position to improperly implement climate-change policy and attack fossil-fuel companies. Raskin withdrew her candidacy in March after Democratic senator Joe Manchin announced his opposition.

In a press release, the senior Republican on the banking committee, Pat Toomey, noted Barr accepted that the Fed “does not have the authority to… allocate credit or its use its regulatory powers” to promote decarbonisation.