Michael Barr, Vice Chair for Supervision at the Federal Reserve, has stepped down, leaving a key gap in the Fed’s Committee on Supervision and Regulation. His departure coincides with increased efforts by Elon Musk's agency, D.O.G.E., to audit the Fed.
Implications of Barr's Departure
Michael Barr's exit leaves the Fed's oversight and regulation committee with two members—Philip Jefferson and Michelle Bowman. While all seven Fed governors still hold votes on regulatory issues, there is no lead figure to guide bank oversight. Barr warned in January that remaining in his role might lead to a political showdown with President Donald Trump, opting to step down to avoid such a confrontation.
Musk's D.O.G.E. Initiatives
Elon Musk has turned his attention to the size of the Fed's workforce, labeling the agency as "absurdly overstaffed." Through the Department of Government Efficiency (D.O.G.E.), he has been requiring Fed employees to submit detailed reports of their work activities. The Fed's operations are in deficit due to high interest rates, despite it not relying on Congress for funding. Musk's concern addresses the decision-making process for interest rates and monetary policy.
Trump-Backed 'Audit the Fed' Movement
The idea of auditing the Fed is not new. Republicans have pushed the Federal Reserve Transparency Act since 2015 without success. With Donald Trump back in office, the debate has resurfaced. At a conservative gathering, Musk supported auditing the Fed, highlighting the need for full government transparency. The movement faces hurdles, as a federal judge blocked D.O.G.E.’s access to a Treasury payment system.
Michael Barr's resignation creates a leadership vacuum at the Fed, complicating bank oversight at a time when external forces like D.O.G.E. and Trump's initiatives aim to exert more control over the institution's activities.
