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WASHINGTON (AP) — President Joe Biden’s pick as the Federal Reserve’s top banking regulator pledged Thursday to help curb high inflation and provide “clear rules” for managing financial innovation.

Speaking to members of the Senate Banking Committee evaluating his candidacy, Michael Barr said, “I believe inflation is very high today and I am determined to bring it down to the Federal Reserve’s 2% target.”

Inflation rose to 8.3%, close to a 40-year high, as the cost of items such as food, gas and plane tickets rose sharply compared to 12 months ago. The Fed faces the difficult and high-risk task of reining in high inflation by raising interest rates sharply without causing a recession. Widespread doubts about its ability to achieve this goal helped the stock market drop.

Barr was a senior Treasury Department official during the Obama administration and helped design the 2010 Dodd-Frank fiscal regulations after the devastating 2008 financial crisis. He is currently dean of the Gerald R. Ford School of Public Policy at the University of Michigan.

If approved by the committee and confirmed by the full Senate, Barr will join the Fed’s Board of Governors as vice chair of auditing, a position created by Dodd-Frank legislation. As one of seven board members, Barr would have a permanent vote on interest rate decisions at each of the Fed’s eight policy meetings each year.

Barr received mostly mild interrogation and met little of the strong opposition that sank ex-Deputy Secretary of the Treasury Sarah Bloom Raskin, Biden’s first choice for the post.

Raskin did not unanimously approve of Senate Republicans and West Virginia Democratic Senator Joe Manchin. They argued that as part of the Fed’s regulatory authority, it would go too far in weighing the impact of climate change and likely discourage banks from lending to oil, gas and coal companies.

Barr tried to downplay the Fed’s role on climate change, saying, “his mandate here is substantial, but quite limited, quite narrow.”

The Fed “should not be in the business of telling financial institutions to lend to or not lend to a particular sector,” he said.

Barr has drawn criticism from some liberal groups for investing in and serving on the boards of multiple fintech firms. Under the question of Senator Elizabeth Warren, a Democrat from Massachusetts, she promised not to seek employment from Fed-regulated firms.

Warren has previously endorsed Barr for the position, and so has Manchin, suggesting he’ll likely get Senate confirmation.

Barr also reiterated the concerns outlined in a recent Fed report on financial stability, noting that stablecoins carry a “risk of working,” or that coins that are often pegged to the dollar risk their value falling as owners try to cash out. their money at once. Investors may lose money if the coin issuer does not have enough assets to use them.

Congress and financial regulators “must wrap their arms around financial stability risks and regulate so we don’t run into situations where people hold an asset that they believe is a cash instrument,” Barr said.

There was only one other vice president of audit, Randal Quarles, whose term expired in January. During his tenure, Quarles made several changes to the financial regulations that attracted criticism from progressives. They argued that Quarles had, among other moves, taken steps that reduced the capital that banks had to hold to ensure they could pay off their debts. Still, banks have generally emerged from the COVID pandemic in sound financial shape.

Barr is a Rhodes scholar who is also a clerk to Justice David Souter on the Supreme Court. He also served in the White House, Department of the Treasury, and State Department during the Clinton administration.

Barr’s hearing came after the Senate approved several other candidates for the board, giving Biden a chance to put the Democratic stamp on the Fed. The Senate last week approved Jerome Powell as the second four-year Fed chairman and Lael Brainard’s #2 vice chairman late last month.