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Home Compliance and Risk

Powell: Creation of Fed vice chair for supervision led to ‘volatility’

February 12, 2025
Reading Time: 1 min read
Powell: Creation of Fed vice chair for supervision led to ‘volatility’

Fed Chairman Jerome Powell testifies before the House Financial Services Committee on Feb. 12.

Federal Reserve Chairman Jerome Powell today said there was “less volatility” on the Fed board before the creation of a vice chairman for supervision, and that volatility is not helpful for the financial institutions it regulates.

The Dodd-Frank Act in 2010 created the requirement that the president designate a vice chair for supervision to develop policy recommendations. That position is currently filled by Michael Barr, who led the recent attempt to implement the proposed Basel III capital requirements. Barr is stepping down as vice chairman at the end of the month and President Trump has yet to nominate a successor.

During a House Financial Services Committee hearing, Barr was questioned by Rep. Bill Huizenga (R-Mich.) about the need for a vice chair for supervision. Powell noted the Fed operated without one for many years, and believed the board was effective. “Also, there was less volatility,” he said.

“You’ve got a group of seven people on the board, and as appointments change, there’ll be some changes in the approach to regulation,” Powell said. “Putting it all in a single person, admittedly, just to recommend to the board can lead to some volatility … and that’s not great for the institutions we want to regulate. We want to have a good set of regulation that doesn’t swing back and forth very much.”

Powell added that the decision on whether to keep the position is up to lawmakers.

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