Fed governor Michael Barr said in a letter to President Joe Biden that he would step down as vice chair for supervision Feb. 28, or earlier if a successor was confirmed. Yet Barr said he would remain on the Fed’s board of governors. His term as governor lasts until 2032.

Barr oversaw the proposal of tough new rules for the largest U.S. banks, which would have required them to significantly increase their financial reserves. The proposal sparked fierce opposition from the largest financial firms, including JPMorgan Chase, and was sharply criticized by Senate Republicans.

During last year’s presidential campaign, there were published reports that former president Donald Trump would try to fire or demote Barr. But at a press conference in November, Fed Chair Jerome Powell said a president doesn’t have the legal authority to do either one.

Sen. Tim Scott, who is in line to chair the Senate Banking Committee, which oversees the Fed, on Monday called Barr’s proposed financial regulations “disastrous.” He has previously said that they would limit lending by banks and weaken the economy.

“Michael Barr has failed to meet the responsibilities of his position,” Scott said in a statement. “I stand ready to work with President Trump to ensure we have responsible financial regulators at the helm.”

By stepping down as vice chair, but not governor, Barr has limited the Trump administration’s options to replace him. All seven seats on the Fed’s board of governors are filled, and an opening won’t occur until Governor Adriana Kugler’s term ends Jan. 31, 2026.

As a result, for now President-elect Trump can only appoint another current governor to the top regulatory position, or wait until next year to fill the vacancy on the board with a new regulator. Governor Michelle Bowman, a Republican appointee, has publicly supported less stringent financial regulations and is a potential replacement.

“The risk of a dispute over the position could be a distraction from our mission,” Barr said in a statement from the Fed. “In the current environment, I’ve determined that I would be more effective in serving the American people from my role as governor.”

Barr took office in June 2022 and was later embroiled in the spate of bank failures in the spring of 2023 that started with Silicon Valley Bank, the third-largest failure in U.S. history. Barr oversaw the preparation of a report that blamed watered-down bank regulations, the Fed’s own staffers, and the banks’ managers for the failures.

Barr then proposed to tighten bank rules, particularly for those banks with $100 billion or more in assets, by requiring them to hold more capital in reserve. Previously, Trump appointees at the Fed had loosed rules for banks with less than $250 billion in assets.

Yet those rules met with ferocious opposition from the banking industry, prompting Powell to announce last March that they would be revised.

The Fed said Monday that it “does not intend to take up any major rulemakings until a vice chair for supervision successor is confirmed.”