Trump And The Federal Reserve Are Definitely Going To Clash

The sudden resignation of Michael Barr, Deputy Chairman of the Federal Reserve, just confirmed what everyone has seen before: a full-blown clash between Donald Trump and the Federal Reserve. Barr, who plans to stay in his position until July 2026, announced on Monday that he will resign next month - if not earlier. Trump, who has wanted to take over the management framework of the Fed, now has a golden opportunity to reshape it. But don't get too comfortable. Barr isn't going anywhere. He plans to continue as the Fed governor until 2032, ensuring that he will have a voice in important decisions. Trump and Barr are on a collision course. Trump and Barr have different ideas about how financial regulations should work. Barr is a thorn in the side of Wall Street and the cryptocurrency industry, promoting strong oversight and tighter rules. On the other hand, Trump believes in deregulation. Even before Barr resigned, tensions were already high. Trump was unhappy with the current leadership of the Fed, although he decided not to fire Jerome Powell, whose term as chairman extends until May 2026. That temporary delay had soothed the market for a while, but Barr's actions have now broken it. You have alluded to this in a statement to Bloomberg, saying that the potential legal challenges to your role make it impractical to continue. You called it "neglectful" but of course avoided mentioning Trump's name. The next step for the president may be to nominate Michelle Bowman, one of his appointees in 2018, to take over Barr's role. Wall Street and cryptocurrencies say 'very good' The market does not wait to react. Bank stocks surged immediately after the public resignation of Barr. The SPDR S&P Bank ETF surged more than 1%, signaling Wall Street's relief. Investors see this as an opportunity for Trump to bring in a business and cryptocurrency-friendly person, escaping the heavy hand of the regulatory agency hanging over their heads. Barr's departure also temporarily halts some major management projects, most notably the Basel project - a set of rules aimed at tightening banking industry supervision, leading to the notorious Operation Choke Point 2.0. His policy is the main reason why banks avoid participating in cryptocurrencies or providing custodial services for cryptocurrency companies. The industry hates that, and with Barr's departure, this reform process is truly frozen. Vice Chairman responsible for oversight, established after the 2008 financial crisis, designed to prevent the collapse of other large financial institutions. Barr's tenure includes dealing with the aftermath of the 2023 collapse of Silicon Valley Bank and other regional banks. These crises forced the Fed to take emergency liquidity measures to prevent further collapse.