Biden Administration Zeroes In on New Fed Nominee Following Earlier Stumbles

The Biden administration, attempting to regain its footing following the rejection of its first choice for the job of vice chairman of the Federal Reserve Board, is reportedly poised to nominate a former Treasury Department official as the Fed’s top banking regulator.Michael Barr, who worked at Treasury during both the Clinton and Obama administrations, is said to be the White House’s top choice. Mr. Barr is dean of the University of Michigan’s Gerald R. Ford School of Public Policy.Mr. Barr was said to be in the running for another banking regulation job, head of the Office of the Comptroller of the Currency, in January 2021 but the selection was shelved following pushback from progressive activists who saw him as too moderate and objected to his work on behalf of cryptocurrency companies.Between 2015 and 2017, Mr. Barr served on the board of advisors of Ripple Labs, a San Francisco company working in the international payments space and developer of the XRP cryptocurrency. In December 2020, the Securities and Exchange Commission sued Ripple and its top executives in a dispute over whether XRP is a currency or a security.News of Mr. Barr’s front-runner status was first reported by Politico. The White House has said a final decision on the matter has yet to be made.The administration was forced to come up with a Plan B for the nomination after Republicans blocked the first choice, Sarah Bloom Raskin.GOP senators on the Senate Banking Committee said they acted out of concern that Ms. Raskin’s previous advocacy on climate change might color how she regulates the banking industry — namely that she might use her powers to convince banks not to work with companies in the fossil fuels industries.When Senator Manchin, who hails from coal-dependant West Virginia, voiced his opposition to Ms. Raskin’s nomination, it essentially ended her chances of being approved by the evenly divided full Senate.Mr. Barr was a key architect of the 2010 Dodd-Frank financial reform act passed following the economic upheaval of 2008-09. The act created the Consumer Financial Protection Bureau, which regulates banks, payday lenders, debt collectors, and other consumer-facing financial companies, as well collects and tracks consumer complaints about those companies.Creation of the bureau was championed by progressives in Congress, including Senator Warren of Massachusetts, who initially proposed the bureau and helped set it up in its infancy. Republican opposition to the agency was so intense that its first director, Richard Cordray, had to be put in place by the Obama administration as a recess appointment.If past statements are any indication, Mr. Barr, if approved for the role, could be expected to try to reverse some of the policies of the Trump administration, of which he has been openly critical.“We need to undo the damage caused by the last four years of policy: rebuilding a strong Consumer Financial Protection Bureau and building resiliency in the financial system with stronger capital and liquidity regulations,” Mr. Barr said a symposium marking the 10th anniversary of the Dodd-Frank act in June 2020. Such open advocacy for more, not less, regulation of the financial sector has left some in Congress wondering whether his nomination will be as seamless as the Biden administration is apparently hoping.“I think his nomination will run into trouble with many Senate Republicans,” one Senate aide said.

Biden Administration Zeroes In on New Fed Nominee Following Earlier Stumbles

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