Senate confirms UM's Barr to serve as nation's top banking regulator

Melissa Nann Burke
The Detroit News

Washington — With bipartisan support, the U.S. Senate on Wednesday confirmed the nomination of the University of Michigan's Michael Barr to serve on the Federal Reserve and as the nation's top banking regulator.

Twenty-one Republicans joined Democrats in voting to confirm Barr by a vote of 66-28 to serve on the Fed's Board of Governors, bringing the panel to its full complement of seven for the first time in nearly a decade.

Michael Barr

Later Wednesday afternoon, senators held a separate vote, also 66-28, to approve his appointment as vice chair for supervision.  

Barr previously held posts in the Treasury Department under Presidents Barack Obama and Bill Clinton, and is now dean of UM's Gerald R. Ford School of Public Policy.

Barr will join another Michigan academic on the Fed board — Michigan State University economist Lisa Cook, who was confirmed in May and is the first Black woman ever to serve on the panel.

Barr's term on the Federal Reserve's Board of Governors would run through 2032, and his term as the Fed's vice chairman of supervision would last four years.

Barr's arrival at the Fed comes at a most challenging time for the central bank as it reckons with historic levels of inflation at a 40-year high, with last month's 1.3% rise putting the annual rate at 9%.

The Fed has started a series of interest rate increases in an effort to stabilize consumer prices and is expected to continue in that vein when it meets next July 26-27.

At his hearing before the Senate Banking Committee, Barr said he'd work to reduce high inflation. “I strongly believe that inflation is far too high today, and I’m committed to bringing it down to the Federal Reserve’s target of 2%," Barr told senators.

He also told the panel in written remarks that politics should play "no role" in setting monetary policy, committing to "adhere strictly to a non-political, data-driven independent approach to policymaking."

Economist Patrick Anderson, CEO of the Anderson Economic Group in East Lansing, has known Barr for several years and said he'd bring a "much-needed" Midwestern perspective to a Fed that for two years has been "missing signals from the heartland."

"Certainly, he brings a regulatory perspective that is more in line with the Biden administration than most business leaders want," Anderson said.

"However, right now we have a three-alarm fire growing in the economy, and the Fed needs some tonic to address its chronic problem of listening too much to Washington and Wall Street and not enough to Detroit and Des Moines.”

Ohio Sen. Sherrod Brown, the Democratic chairman of the banking panel, detailed Barr's expertise in floor remarks Wednesday, saying he's worked for a quarter century to make the country's financial system "safer and fairer."

Brown said Barr played a "critical" role in responding to the 2008 financial crisis. Barr back then was an assistant Treasury secretary for financial institutions in 2009 and 2010 during the Obama administration and helped form the 2010 Dodd-Frank regulations in response to the financial crisis.

"We created the vice chair for supervision to identify and to stay ahead of risk to our country's financial system — cyberthreats, volatile cryptocurrency, the climate crisis," Brown said. 

"We created this job to hold the biggest banks accountable, so that Wall Street doesn't put working families and businesses on Main Street at risk."

Pennsylvania Sen. Pat Toomey, the panel's top Republican, has also praised Barr, saying he was well-qualified given his prior government service and "distinguished" career in financial services and regulation, adding that he has "strongly" committed to promote transparency and accountability.

"While I disagree with Professor Barr on a number of policy issues, he has pledged to fight the record high inflation that's hurting American families, and he's also publicly acknowledged that the Fed does not have the authority to nor should it, to allocate credit or use its regulatory powers to accelerate the transition to a low carbon economy," Toomey said last month at a committee meeting.

Barr served on the National Economic Council in the Obama White House and previously worked in the Clinton administration as Treasury Secretary Robert E. Rubin's special assistant and as deputy assistant secretary of the Treasury. He was also special adviser to Clinton and for the U.S. Department of State, according to his bio.

After the vote, Sen. Gary Peters, D-Bloomfield Township, said Barr's "leadership and experience will play a key role in strengthening our economy and supporting families in Michigan — and across the country." 

Biden’s first pick for the Fed post, Sarah Bloom Raskin, withdrew her nomination after continued opposition from Republicans and Democratic Sen. Joe Manchin of West Virginia. 

Barr would follow one of his predecessors as Ford School dean, Edward Gramlich, who served on the Fed's Board of Governors from 1997 to 2005.