Michael Barr is officially out. The Federal Reserve’s Vice Chair for Supervision has stepped down from his role, leaving a major gap in the central bank’s Committee on Supervision and Regulation.
His exit, confirmed last week, removes the only official in charge of overseeing banking regulations just as Elon Musk’s Department of Government Efficiency (D.O.G.E.) intensifies efforts to audit the Fed’s monetary policy.
Barr’s resignation means the committee now has only two members—Philip Jefferson and Michelle Bowman. While all seven Fed governors still have a vote on regulatory matters, there’s no longer a lead official guiding bank oversight.
The timing of his departure is no accident. In January, Barr warned that staying in the role could lead to a political showdown with President Donald Trump. Rather than fight it out, he left.
The Vice Chair for Supervision role was created under the Dodd-Frank Act after the 2008 financial crisis. Without Barr, Trump will have to appoint a new chair from the existing board since the next vacancy doesn’t open until 2026. But for now, the Fed’s regulatory leadership is in limbo.
Musk’s D.O.G.E targets the Fed’s 24,000 employees
Musk has turned his focus to the Federal Reserve’s workforce, calling the central bank “absurdly overstaffed” in a post on X (formerly Twitter) Sunday.
It’s the second time in months he’s made the accusation, previously posting the same claim in December. This time, Musk shared a graph of Fed employment numbers with the caption “End the Fed,” responding, “The Fed is absurdly overstaffed.”
Musk’s Department of Government Efficiency (D.O.G.E.) has already forced thousands of federal workers to justify their jobs by submitting detailed emails on their work activity. Now, the agency is setting its sights on the 24,000 employees across the Fed’s headquarters and 12 regional banks.
Unlike most government agencies, the Fed doesn’t rely on Congress for funding. Instead, it makes money from interest on government securities.
But the central bank has been operating at a deficit due to high interest rates on bank reserves. That’s where D.O.G.E. comes in.
Musk is not targeting the Fed’s $6.8 trillion balance sheet, which is already audited by the Government Accountability Office (GAO) and private firms. His concern is the decision-making process behind interest rates and monetary policy.
Musk’s push comes at a critical moment. Trump’s executive order last Tuesday has already stripped some of the Fed’s authority over big banks, shifting power to political appointees in agencies like the Securities and Exchange Commission (SEC) and Federal Trade Commission (FTC). The order, however, leaves the Fed’s monetary policy untouched—for now.
Trump’s second term reignites the “audit the Fed” movement
The idea of a Fed audit isn’t new. Republicans have been pushing for it since 2015 with the Federal Reserve Transparency Act, also called “Audit the Fed.”
The bill, which aimed to make interest rate decisions subject to congressional approval, never gained traction. Last year, Senators Chuck Grassley and Rand Paul tried to revive it, but failed again.
Now, with Trump back in office and Musk backing the idea, the debate has resurfaced. Musk was asked at a conservative gathering last Thursday whether the Fed should be audited. His response? “Yeah, sure.”
Trump’s new executive order already gives his appointees more power over federal agencies. But the Fed’s monetary policy remains outside that reach. That could change quickly if the push for an audit gains momentum.
Earlier this month, a user on X posted that all aspects of the Fed should be fully audited. Musk agreed, replying: “All aspects of the government must be fully transparent and accountable to the people. No exceptions, including, if not especially, the Federal Reserve.”
The D.O.G.E. audit efforts hit a roadblock this month when a federal judge temporarily blocked Musk’s department from accessing a Treasury Department payment system. But that hasn’t slowed the momentum.
Wall Street defends the Fed’s independence
The financial sector is pushing back. Former Fed Chair Ben Bernanke warned against political interference in monetary policy, writing in 2016 that the Fed makes decisions with “the best technical information available” and that “political interventions in monetary policy decisions would not lead to better results.”
Wall Street executives are also weighing in. After Trump’s November election victory, Bank of America CEO Brian Moynihan and Lazard CEO Peter Orszag argued that an independent Fed is in the economy’s best interest.
Roger Ferguson, a former Fed Vice Chair, told CNBC last month: “An independent Fed is good for the U.S. economy, which in turn is good for everyone.”
For now, Trump’s Treasury Secretary Scott Bessent insists there’s no plan to interfere with the Fed. At his Senate confirmation hearing in January, Bessent said, “I think on monetary policy decisions, the (Fed) should be independent.”
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Source: https://www.cryptopolitan.com/feds-michael-barr-permanently-resigns-ahead-of-elon-musks-d-o-g-e-audit/