The White House Tightens Grip on Federal Reserve Bank Regulation
The White House has issued an executive order strengthening its control over the Federal Reserve's regulation of major banks. However, the order explicitly excludes monetary policy—interest rate setting—from its purview.
Under the new order, independent agencies, including the Federal Reserve Board of Governors, must submit significant regulations to the Office of Management and Budget (OMB). The OMB, led by Russell Vought, will establish performance and management objectives for agency heads. Additionally, the OMB can adjust budgets, potentially limiting agencies' spending.
The executive order aims to bring the Fed's bank oversight closer to White House priorities. Independent agencies such as the SEC, FCC, and FTC will also be subject to increased scrutiny.
This move aligns with the Trump administration's efforts to reshape financial regulation. Earlier this month, it halted operations at the CFPB and is considering consolidating other banking regulators.
JPMorgan Chase CEO Jamie Dimon supports restructuring financial regulatory agencies, believing it's time to review current regulations.
Meanwhile, Federal Reserve Board Vice Chair for Supervision Michael Barr plans to step down at the end of January. Barr's departure opens up an opportunity for the White House to appoint a more aligned replacement. However, Fed Chair Jerome Powell insists he will serve out his term, despite Trump's previous criticism of his monetary policy.