Wall Street notches another win as Fed’s Barr clears the way for gentler banking regulator – CNBC

Credit CardsLoansBankingMortgagesInsuranceCredit MonitoringPersonal FinanceSmall BusinessTaxesHelp for Low Credit ScoresInvestingSELECTAll Credit CardsFind the Credit Card for YouBest Credit CardsBest Rewards Credit CardsBest Travel Credit CardsBest 0% APR Credit CardsBest Balance Transfer Credit CardsBest Cash Back Credit CardsBest Credit Card Welcome BonusesBest Credit Cards to Build CreditSELECTAll LoansFind the Best Personal Loan for YouBest Personal LoansBest Debt Consolidation LoansBest Loans to Refinance Credit Card DebtBest Loans with Fast FundingBest Small Personal LoansBest Large Personal LoansBest Personal Loans to Apply OnlineBest Student Loan RefinanceSELECTAll BankingFind the Savings Account for YouBest High Yield Savings AccountsBest Big Bank Savings AccountsBest Big Bank Checking AccountsBest No Fee Checking AccountsNo Overdraft Fee Checking AccountsBest Checking Account BonusesBest Money Market AccountsBest CDsBest Credit UnionsSELECTAll MortgagesBest MortgagesBest Mortgages for Small Down PaymentBest Mortgages for No Down PaymentBest Mortgages with No Origination FeeBest Mortgages for Average Credit ScoreAdjustable Rate MortgagesAffording a MortgageSELECTAll InsuranceBest Life InsuranceBest Homeowners InsuranceBest Renters InsuranceBest Car InsuranceTravel InsuranceSELECTAll Credit MonitoringBest Credit Monitoring ServicesBest Identity Theft ProtectionHow to Boost Your Credit ScoreCredit Repair ServicesSELECTAll Personal FinanceBest Budgeting AppsBest Expense Tracker AppsBest Money Transfer AppsBest Resale Apps and SitesBuy Now Pay Later (BNPL) AppsBest Debt ReliefSELECTAll Small BusinessBest Small Business Savings AccountsBest Small Business Checking AccountsBest Credit Cards for Small BusinessBest Small Business LoansBest Tax Software for Small BusinessSELECTAll TaxesFiling For FreeBest Tax SoftwareBest Tax Software for Small BusinessesTax RefundsTax BracketsTax TipsTax By StateTax Payment PlansSELECTAll Help for Low Credit ScoresBest Credit Cards for Bad CreditBest Personal Loans for Bad CreditBest Debt Consolidation Loans for Bad CreditPersonal Loans if You Don’t Have CreditBest Credit Cards for Building CreditPersonal Loans for 580 Credit Score or LowerPersonal Loans for 670 Credit Score or LowerBest Mortgages for Bad CreditBest Hardship LoansHow to Boost Your Credit ScoreSELECTAll InvestingBest IRA AccountsBest Roth IRA AccountsBest Investing AppsBest Free Stock Trading PlatformsBest Robo-AdvisorsIndex FundsMutual FundsETFsBondsThe early departure of the Federal Reserve’s top financial regulator allows for a more industry-friendly official to take his place, the latest boon for U.S. banks riding a wave of post-election optimism.Federal Reserve Vice Chair for Supervision Michael Barr said Monday that he plans to step down from his role by next month to avoid a protracted legal battle with the Trump administration, which had weighed seeking his removal.The announcement, a reversal from Barr’s previous comments on the matter, ends his supervisory role roughly 18 months earlier than planned. It also removes a possible impediment to Donald Trump’s deregulatory agenda.Banks and other financial stocks were among the big winners after the election of Trump in November on speculation that softer regulation and increased deal activity, including mergers, were on the way. Weeks after his victory, Trump selected hedge fund manager Scott Bessent as his choice for Treasury secretary.Trump has yet to name picks for the three major bank regulatory agencies — the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau.Now, with Barr’s resignation, a more precise image of incoming bank regulation is forming.Trump is limited to picking one of two Republican Fed governors for vice chair of supervision: Michelle Bowman or Christopher Waller.Waller declined to comment, while Bowman didn’t immediately respond to request for comment.Bowman, whose name had already appeared on short lists for possible Trump administration roles and is considered the front-runner, has been a critic of Barr’s attempt to force American banks to hold more capital — a proposal known as the Basel III Endgame.”The regulatory approach we took failed to consider or deliver a reasonable proposal, one aligned with the original Basel agreement yet suited to the particulars of the U.S. banking system,” Bowman said in a November speech.Bowman, a former community banker and Kansas bank commissioner, could take on “industry-friendly reforms” around a number of sore spots for banks, according to Alexandra Steinberg Barrage, a former FDIC executive and partner at Troutman Pepper Locke.That includes what bank executives have called an opaque Fed stress test process, long turnaround times for merger approvals and what bankers have said are sometimes unfair confidential bank exams, Barrage said.When it comes to the Basel Endgame, first announced in July 2023 before a toned-down proposal was released last year, it’s now more likely that its ultimate form will be far gentler for the industry, versus versions that would’ve forced large banks to withhold tens of billions of dollars in capital.Barr led the interagency effort to draft the sweeping Basel Endgame, whose initial version would’ve boosted capital requirements for the world’s largest banks by roughly 19%. Now, Barrage and others see a final version that is far less onerous.”Barr’s replacement could still work with the other agencies to propose a new B3 Endgame rule, but we think such a proposal would be capital-neutral industry-wide,” Stifel analyst Brian Gardner said Monday in a note. “Bowman voted against the 2023 proposal, and we expect she would lead any B3 re-write in a different direction.”If lenders ultimately beat back efforts to force them to hold more capital, that would enable them to boost share buybacks, among other possible uses for the money.Bank stocks traded higher Monday after Barr’s announcement, with the KBW Bank Index rising as much as 2.4% during the session. Citigroup and Morgan Stanley, which have both garnered headlines for regulatory matters last year, were among the day’s biggest gainers, each rising more than 2%.Notably, Barr is not resigning from his role as one of seven Fed governors, which preserves the current 4-3 advantage of Democrat appointees on the Fed board, according to Klaros Group co-founder Brian Graham.”Barr’s resignation of the vice chair role, while remaining a governor, is actually very clever,” Graham said. “It preserves the balance of power for board votes for a year or so, and it constrains the choices for his replacement to those currently serving on the board.”Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2025 CNBC LLC. All Rights Reserved. A Division of NBCUniversal
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Source: https://www.cnbc.com/2025/01/07/fed-michael-barr-clears-way-gentler-banking-regulator.html