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05:45 - Source: CNNBusiness
CNN  — 

President Joe Biden on Friday announced his intent to nominate former Obama Treasury official Michael Barr as the vice chair for supervision of the Federal Reserve, a move that would install a key architect of the Dodd-Frank Act of 2010 as the nation’s top banking regulator.

The announcement comes after Biden’s initial nominee, Sarah Bloom Raskin, withdrew her nomination in March, following opposition in the Senate based on her stance on climate change and fear that she could discourage banks from lending to fossil fuel companies. Democratic Sen. Joe Manchin of West Virginia joined Republicans in opposing her, effectively torpedoing her nomination.

In a statement Friday, Biden touted Barr, who is currently the dean of the University of Michigan’s public policy school, for his “strong support from across the political spectrum.”

Barr previously served in the Obama administration as assistant secretary for financial institutions under Treasury Secretary Timothy Geithner, and was instrumental in designing Dodd-Frank, one of the most expansive pieces of consumer protection legislation to come out of the 2008 financial crisis. The banking rule also created the role of vice chair for supervision, the position for which Barr is nominated, as Biden noted in a statement released Friday.

“Barr has spent his career protecting consumers, and during his time at Treasury, played a critical role in creating both the Consumer Financial Protection Bureau and the position for which I am nominating him. He was instrumental in the passage of Dodd-Frank, to ensure a future financial crisis would not create devastating economic hardship for working families,” Biden said.

Biden has pledged to make the Fed more diverse in terms of both its gender and racial makeup. Several nominees to the Fed’s Board of Governors, including Jerome Powell for a second term as Fed chair and Lael Brainard as vice chair, still await a vote from the Senate Banking Committee later this month. Economists Philip Jefferson and Lisa Cook — who would be the first Black woman to serve on the Fed’s board — also await Senate approval.

“The Fed’s Vice Chair for Supervision is a powerfully important financial regulator, responsible for holding the biggest banks accountable and preventing the next financial crisis,” said Sen. Elizabeth Warren in a statement released Friday. “I intend to support President Biden’s nominee.”

However, Republicans already signaled they may put up a fight on Barr’s nomination. Pat Toomey, the top Republican on the Senate Banking Committee, tweeted Friday morning that Barr “defended Dodd Frank’s big-bank bailout mechanism, which enshrined into law taxpayer bailouts of banks. He was also the primary author of the unconstitutional and unaccountable CFPB.”

One other potential point of contention could be Barr’s close associations in the fintech world, including a brief stint on the board of Ripple, a cryptocurrency firm that has since come under scrutiny from the Securities and Exchange Commission.

Barr’s nomination comes at a crucial point for the Fed as it aims to engineer a soft landing for the economy amid the highest inflation in 40 years. Last month the central bank raised its benchmark interest rate for the first time since 2018 as part of a series of moves to tighten the “easy money” policy that supported the economy during the worst of the Covid pandemic, and has indicated that it is ready to ramp up rates at a faster pace.

This story has been updated with additional information.