Biden nominates former US Treasury official to lead Fed regulation

Joe Biden has tapped Michael Barr, a former top Treasury official, to lead regulatory oversight at the Federal Reserve, after the US president’s previous pick withdrew her candidacy after fierce political opposition.

If confirmed as the US central bank’s vice-chair for supervision, Barr, who was the assistant secretary for financial institutions at the Treasury during the Obama administration, will assume a position that has been left vacant since October and proven difficult for the White House to fill.

Biden had previously nominated Sarah Bloom Raskin, the former deputy Treasury secretary, for the role, whose responsibilities include setting rules and regulations for Wall Street’s biggest banks.

Republicans on the powerful Senate banking committee, which controls the confirmation process for Fed nominees, had launched a campaign to block her advancement, after taking issue with her calls for regulators to more proactively address financial risks related to climate change.

Blaming “relentless attacks by special interests”, Raskin withdrew after Joe Manchin, the moderate Democrat from West Virginia, said he would join Republicans in opposing her.

Barr, who also worked for the Clinton administration, will need the support of all 50 Democrats to be confirmed, with Kamala Harris, vice president, casting the tiebreaking vote, unless a Republican breaks ranks to support him.

Barr, who is dean of the University of Michigan’s public policy school, played a decisive role in crafting the post-global financial crisis regulatory framework, outlined in the Dodd-Frank Act in 2010 – experience Biden lauded in a statement on Friday.

“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,” the president 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.”

Biden on Friday said his pick had “strong support from across the political spectrum” and noted that Barr was previously confirmed with bipartisan support.

Sherrod Brown, the Democratic chair of the Senate banking committee, on Friday endorsed Biden’s pick, saying he “understands the importance of this role at this critical time in our economic recovery.”

Barr, once seen as a leading contender to become the next comptroller of the currency in the Biden administration, is also expected to garner additional support from progressive members of the Democratic party, including Elizabeth Warren of Massachusetts, who has praised his work in the past .

Biden stressed that “[Barr] understands that this job is not a partisan one, but one that plays a critical role in regulating our nation’s financial institutions to ensure Americans are treated fairly and to protect the stability of our economy ”.

If he receives sufficient votes, Barr, a graduate of Yale Law School, will join a Fed that is grappling with the highest US inflation in roughly 40 years. The central bank has already started raising interest rates, but is under pressure to take much more aggressive action.

High inflation has dented Biden’s popularity and become a pivotal political issue ahead of the midterm elections later this year.

The president said on Friday he is doing “everything” in his power to lower prices for households while emphasizing the Fed’s “critical role in fighting inflation”.

He also urged the Senate to confirm his other nominees to fill top positions at the central bank, including Jay Powell, the sitting chair who was renominated in November, as well as Fed governor Lael Brainard, who was nominated as the central bank’s vice-chair .

Biden also nominated Lisa Cook, a professor of economics and international relations at Michigan State University, and Philip Jefferson, a professor of economics at Davidson College, to fill the two remaining vacancies on the Fed’s board of governors.

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