By Pete Schroeder
WASHINGTON (Reuters) -Federal Reserve Vice Chair for Supervision Michael Barr has sought legal advice to explore his options against any attempts by President-elect Donald Trump to remove him, sources said, the latest sign that a conflict might be looming between the incoming administration and the central bank.
Barr, who was tapped to serve as the Fed’s top regulatory official by President Joe Biden, has in recent weeks sought advice from law firm Arnold & Porter in his personal capacity, two of the sources said.
The sources said he has sought counsel in a personal capacity because typically individual officials, not their agencies, have legal standing to fight in court attempts to remove them.
The Fed declined to comment via a spokesperson. Representatives for Arnold & Porter and the Trump transition did not respond to requests for comment. Barr did not respond to a call or email requesting comment.
Barr, whose term overseeing bank supervision expires in July 2026, has told Congress that he intends to serve it out. Reuters could not learn further details about Barr’s discussions with lawyers, including whether he would fight his removal or not.
The sources requested anonymity to speak about Barr’s plans.
Barr’s move comes after reports in recent months that Trump’s advisers were looking for ways to increase the incoming White House’s sway over the Fed, alarming officials and investors who argue that the central bank’s independence is necessary for it to be able to properly set monetary policy.
Fed Chair Jerome Powell — who was appointed to the role by Trump only to be subsequently criticized for his decisions on interest rates — was seen as a target of the incoming president. But Powell said after the November presidential election that Trump would not have the authority to remove him. Trump subsequently said he does not intend to remove Powell.
The law establishing the Fed says the president is only allowed to fire Fed governors for cause, but it is silent on whether Trump would have the power to demote Barr from his role as Vice Chair for Supervision. Powell has previously said demoting Fed officials is not permitted under the law.
Barr has earned powerful critics on Wall Street