White House Tightens Control over Federal Reserve's Bank Regulation
The Biden administration is asserting greater authority over the Federal Reserve's regulation of major financial institutions through an executive order. While monetary policy remains under the Fed's purview, the order expands the White House's influence over the Fed's oversight of banks.
Specifically, the order subjects the Fed's Board of Governors to the Office of Management and Budget (OMB) for major rulemakings. The OMB will set performance metrics and review agency budgets, potentially limiting their spending on certain initiatives.
This move aligns with the administration's efforts to restructure banking regulators, including the Consumer Financial Protection Bureau. The administration recently suspended the CFPB's operations and is considering consolidating other agencies into the Treasury Department.
Industry leaders, such as JPMorgan Chase CEO Jamie Dimon, have advocated for revisiting the regulatory framework governing banks. The White House's actions are seen as a step in that direction.
Meanwhile, Federal Reserve Board Vice Chair for Supervision Michael Barr will step down from his position at the end of the month. Despite initial concerns about Trump's intentions, Barr's departure is seen as a proactive measure to avoid potential conflict.
Fed Chair Jerome Powell has affirmed his commitment to serving his term through 2026, regardless of political pressure. The White House has also indicated that it has no plans to remove Powell, acknowledging the limitations of its legal authority.