President Biden will nominate Michael Barr to become the nation's most powerful bank regulator, hoping to install a former Obama administration official and leading architect of the Dodd-Frank law as vice chair of the Federal Reserve.
Why it matters: Fifteen months into his presidency, Biden has had limited success in getting key financial regulatory jobs filled — a track record he aims to change with the Barr nomination.
State of play: If confirmed as vice chair for supervision, Barr, currently dean of the University of Michigan's public policy school, would play a lead role shaping regulation of major banks and of the financial system more broadly.
- As an assistant secretary in the Obama Treasury, he played a key role in creating the Consumer Financial Protection Bureau.
- He worked closely with liberal Senator Elizabeth Warren creating the CFPB, while maintaining a reputation for being pragmatic and even-keeled. He was confirmed to his Treasury appointment by Senate voice vote in 2009.
The backstory: The role of Fed vice chair for supervision, created by the Dodd-Frank Act more than a decade ago, has significant power to oversee banks and, more broadly, the financial system.
- Yet no Democratic president has filled the position. Obama appointee Dan Tarullo fulfilled the role in practice without formally being named to the position. Trump appointee Randall Quarles occupied the job until late last year.
- Sarah Bloom Raskin, Biden's first nominee to the position, withdrew her candidacy last month. It had become clear she would not be confirmed by the Senate after she lost support from swing Sen. Joe Manchin, for her advocacy that bank regulators favor policies that could help lower carbon emissions.
Biden has struggled to fill leading bank regulatory positions, as nominations that excited the left flank of the Senate Democratic caucus alienated the center. The nomination of Saule Omarova to comptroller of the currency failed after her writings advocating greater state control of the banking system came to light.
Between the lines: Time is of the essence for Democrats in filling these jobs. If Republicans win the Senate in November, Biden will be more constrained in making major appointments than he already is.
Fun fact: The addition of Barr to the Fed would amount to something of a raid of Michigan's public universities by the central bank. Susan M. Collins, provost at Michigan, is set to become president of the Boston Fed on July 1. Lisa Cook, an economist at intra-state rival Michigan State, is awaiting Senate confirmation to become a Fed governor.
The bottom line: Barr may be able to thread the needle between the liberal and centrist wings of the Democratic coalition, which would enable Biden to finally get his own personnel in place to regulate the financial system.
