The US Federal Reserve's top bank regulator on Monday announced he will step down from his position next month, avoiding a clash with president-elect Donald Trump.
The decision by Michael Barr, the Fed's vice chairman for banking supervision, comes after mounting speculation that Mr Trump was considering sacking him. Mr Barr had been seeking legal advice on exploring options against attempts by Mr Trump to remove him from his position, Reuters reported last month. It is unclear if a President can fire a Fed official.
By stepping down, Mr Barr will avoid any legal clashes, although it will allow Mr Trump to name a successor to the role. But with Mr Barr staying on as a Fed governor, Mr Trump will have to name a member from the existing seven-member Federal Reserve Board to replace him.
Mr Barr did not mention Mr Trump by name in his resignation statement, but said “the risk of a dispute over the position” could distract the Fed from regulating the banking system. Mr Barr said he will continue serving as a member of the Federal Reserve Board of Governors.
The Fed said it does not intend to make any major rules until a successor is confirmed.
The US central bank has been in the process of implementing a new set of banking reforms as part of the Basel III Endgame process that have been widely criticised by the banking industry. Mr Barr's departure casts further uncertainty on its status.
After the Fed's initial proposal was panned by numerous interest groups and public officials, Mr Barr in September previewed a new, scaled-down plan that would cut capital requirements for the largest US banks under Basel III.
That proposal would require the eight so-called global systemically important banks to increase their capital by 9 per cent, as opposed to 19 per cent, designed to act as a buffer against financial shocks.
The position of vice chairman or chairwoman for supervision was created after the global financial crisis to strengthen the central bank's regulation of the US financial system.
The National has contacted Mr Trump's transition team for comment.
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