Biden picks Michael Barr, UM dean, for Fed's bank regulation post
Washington — President Joe Biden said Friday he plans to nominate Michael Barr, the dean of the University of Michigan's public policy school, to be the Federal Reserve's vice chairman of supervision.
If approved by the U.S. Senate, Barr potentially could be one of two members of the Board of Governors with ties to Michigan, a state that because of the automotive industry is particularly vulnerable to changes in inflation and interest rates that the Fed influences.
Biden also has nominated Lisa Cook, a professor of economics and international relations at Michigan State University, who is awaiting a Senate confirmation vote and could become the first Black woman to serve on the board.
The selection of Barr comes after Biden’s first choice for the Fed post, Sarah Bloom Raskin, withdrew her nomination a month ago in the face of opposition from Republicans and one Democrat, Sen. Joe Manchin of West Virginia. Raskin's critics had argued that she would apply the Fed’s regulatory authority to climate change and possibly discourage banks from lending to energy companies.
But with Barr, Biden noted the importance of politics in a Friday statement that said his nominee had previously cleared the Senate on a bipartisan basis.
“Michael brings the expertise and experience necessary for this important position at a critical time for our economy and families across the country,” Biden said.
The Democratic president said that 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.”
Before becoming dean of Michigan's Gerald R. Ford School of Public Policy, Barr was an assistant Treasury secretary for financial institutions during the Obama administration who helped design the 2010 Dodd-Frank regulations after the devastating 2008 financial crisis.
Barr, a Rhodes Scholar who clerked for former Justice David Souter on the Supreme Court, also served during the Clinton administration at the White House, the Treasury Department and the State Department.
Despite those credentials, some liberal critics last year blocked Barr’s candidacy to become the Biden administration’s comptroller of the currency, a position that is responsible for regulating national banks. These critics viewed with suspicion Barr’s role on the advisory boards of the financial firms Lending Club and Ripple Labs. They also asserted that he had helped dilute proposals for stricter bank regulations during the Obama administration.
But Ohio Sen. Sherrod Brown, the Democratic chairman of the Banking Committee, voiced full support for Barr.
“Michael Barr understands the importance of this role at this critical time in our economic recovery,” Brown said. "I strongly urge my Republican colleagues to abandon their old playbook of personal attacks and demagoguery and put Americans and their pocketbooks first.”
Others offer strong praise for Barr and say he appears well suited for the Fed position.
David Dworkin, president of the National Housing Conference, which advocates for affordable housing, suggested that Barr’s understanding of Wall Street gives him the right mix of “centrist expertise and progressive policy views’’ to win confirmation in a closely divided Senate.
Patrick Anderson, CEO of the Anderson Economic Group consulting firm in East Lansing, has known Barr for several years and participated in policy simulations at the university with him. He noted Barr has brought in a broad array of visiting professors to the school from both sides of the political aisle.
"He has serious interest in the economy of states like Michigan. He can bring exposure to the people and problems of Midwestern economies," Anderson said. "The Fed is too dominated by Wall Street financial specialists and people interested in international monetary transfers than the work-a-day, trying-to-meet-the-grocery-bill people who live in the Midwest.
"We need somebody who understands the household in Trenton as much as someone who is thinking about the trader on Wall Street. He’s not going to get buffaloed by the staff or forget about people in Dearborn and Detroit."
Barr would follow in the footsteps of a Ford School dean predecessor, Edward Gramlich, who served on the Board of Governors from 1997 to 2005. Gramlich was an early figure to warn about the subprime lending crisis, a proponent of reforms to maintain the solvency of the Social Security trust funds, and a champion of consumer protections. Barr worked with Gramlich in Washington on community development, fair lending policies and subprime mortgage market research.
"Dean Barr is sitting in quite the chair," said Anderson, who was a mentee and teaching assistant to the late Gramlich while a graduate student at UM.
Barr would be joining the Fed at an especially challenging and high-risk period for the central bank and the economy.
The Fed is set to raise interest rates aggressively in the coming months to try to reduce persistently high inflation. Yet it will be extraordinarily difficult for Fed Chair Jerome Powell — who is awaiting Senate confirmation for a second term — to slow inflation by raising borrowing costs without also weakening the economy and perhaps even causing a recession.
“This is about landing a very complicated plane on the runway smoothly,” Dworkin said. “It’s very hard to do.”
Detroit News Staff Writer Breana Noble contributed.