Michael Barr to Leave His Role as Fed Vice Chair for Supervision

Michael Barr will step down from his role as the Federal Reserve’s vice chair for supervision by Feb. 28, or sooner if President-elect Donald J. Trump appoints a successor, the Fed said on Monday.

Mr. Barr will continue to serve on the central bank’s Board of Governors. But in an interview, Mr. Barr said the decision to leave his role as vice chair of supervision was intended to sidestep a protracted legal battle with Mr. Trump that he believed could damage the central bank.

Some individuals attached to the Trump administration wanted to fire Mr. Barr before his term as vice chair expired, according to people familiar with the matter who spoke on background because of the sensitivity of the issue.

That could have resulted in a lengthy — and costly — legal fight over whether an incoming president has the authority to remove someone from a Senate-confirmed position at an independent agency.

Some financial regulatory experts questioned why Mr. Barr — and the Fed itself — would allow a political change to influence who served in a powerful role. Jerome H. Powell, the Fed’s chair, has made a point of saying that the Fed is independent of the White House and that its decisions are not influenced by politics. Mr. Powell has also insisted that Mr. Trump lacks the legal authority to fire him from his role as Fed chair, which is also confirmed by the Senate.

“I’m surprised by Barr’s announcement, because I expected him to resist Republican calls for his ouster and make a point of defending the Fed’s independence,” Ian Katz, managing director at Capital Alpha, said in an email.