Federal Reserve Governor Michael Barr has expressed concerns over recent regulatory changes that have eased restrictions on U.S. banks, warning that such moves could undermine the overall stability of the financial system. Speaking on Saturday, Barr said the steps taken by the Federal Reserve and other agencies amount to a significant weakening of bank regulation and supervision.

Barr cautioned that while the effects of deregulation might not be immediately visible, the vulnerabilities created could accumulate over time and potentially pose serious risks to the economy. His remarks come amid efforts by Trump-era officials to roll back some of the tighter regulations imposed on Wall Street lenders following the 2008 financial crisis.

Among the regulatory changes are relaxed capital requirements for large banks, slimmer liquidity mandates, reduced supervisory oversight, and new guidelines aimed at helping traditional banks better compete with private-credit firms. These adjustments have been largely supported by Fed Vice Chair for Supervision Michelle Bowman, who assumed her role approximately one year ago after Barr stepped down. Bowman’s nomination was seen as a strategic move to avoid potential conflicts with the Trump administration.

Barr stressed that reducing capital buffers and oversight could increase the likelihood of bank stress during periods of economic difficulty, heightening financial stability risks. While proponents of the changes argue they provide banks with greater flexibility and better align regulatory burdens with current market conditions, Barr and others maintain that weakening these safeguards could have long-term consequences for the resilience of the banking sector.

The debate highlights the ongoing tension between efforts to ease regulatory constraints on financial institutions and concerns about preserving the safeguards designed to prevent another financial crisis. Barr’s warnings underscore the risks that deregulation might sow vulnerabilities that become apparent only when confronted with future economic shocks.