White House Tightens Control over Fed Bank Regulation
The Biden administration has issued an executive order giving the Office of Management and Budget (OMB) increased oversight over independent agencies, including the Federal Reserve.
Monetary Policy Remains Under Fed's Control
While the new order extends OMB's authority, it specifically excludes the Federal Open Market Committee (FOMC), which sets interest rates. This ensures that monetary policy remains within the Fed's purview.
Increased Oversight of Bank Supervision
However, the order does grant the OMB greater control over the Fed's supervision and regulation of major banks. The OMB will establish performance standards and review budgets for the Fed's Board of Governors in this capacity.
Rethinking Bank Regulation
The executive order aligns with the Trump administration's efforts to restructure bank regulatory agencies. It follows recent actions against the Consumer Financial Protection Bureau and discussions on consolidating other regulators.
Industry Perspective
JPMorgan Chase CEO Jamie Dimon supports restructuring of financial regulatory agencies, citing the need for a comprehensive review of current rules.
Fed Leadership Changes
Federal Reserve Board Vice Chair for Supervision Michael Barr is stepping down at the end of the month, a move that has drawn attention due to his appointment by former President Biden. Fed Chair Jerome Powell has reaffirmed his commitment to serving his term through May 2026, despite previous criticism from President Trump.