Michael Barr Criticizes Regulatory Changes, Warns of Growing Financial

Jun 6, 2026

Federal Reserve Governor Michael Barr has criticized recent regulatory changes for U.S. lenders, according to a report from Bloomberg. In prepared remarks, Barr stated that actions taken by the Federal Reserve and other agencies over the past year would undermine the safety and soundness of banks and increase financial stability risks. He warned that vulnerabilities from deregulation may not be visible now but could build over the coming years and threaten serious harm to the economy.

Barr specifically noted that proposals from regulators have considerably weakened bank regulation and supervision. Under the current administration, officials have loosened rules for Wall Street lenders, including reducing how much capital big banks must hold as a buffer against potential losses, narrowing the scope of supervision, and creating a path for traditional lenders to compete with private-credit firms. These changes have resulted in a series of wins for the banking industry under Fed Vice Chair for Supervision Michelle Bowman, who assumed the role a year ago. Bowman was nominated after Barr resigned from that position to avoid a potential conflict with President Donald Trump.

Barr cautioned that weaker capital rules, liquidity requirements, and oversight can increase the risks of bank stress. He described achieving appropriate bank regulation and supervision as a balancing act, noting that banks need room to grow so their lending can support innovation and aspiration, but that without proper safeguards, banks striving for higher profits may take excessive risks. He added that when banks get into trouble, their downfall threatens businesses and households and could put the economy at risk. Barr advised banking watchdogs to take steps to mitigate vulnerabilities, emphasizing that with solid capital and stable funding sources, individual banks and the banking system as a whole can absorb a wide range of shocks, such as unexpected losses, while continuing to lend.