WASHINGTON — Federal Reserve Gov. Michael Barr is warning that recent efforts to weaken banking regulations could increase risks across the financial system and potentially repeat past crises.
Speaking at an event hosted by the National Fair Housing Alliance, Barr said regulatory safeguards put in place after the 2008 financial crisis are being eroded, creating what he described as “significant risk” to financial stability, according to Scotsman Guide. He pointed to historical cycles of deregulation preceding major disruptions, including the savings and loan crisis of the 1980s and the 2007–2008 mortgage collapse, Scotsman Guide reported.
Barr also raised concerns about the weakening of oversight at the Consumer Financial Protection Bureau, saying reduced supervision of nonbank institutions poses a “huge risk” to the system, according to Scotsman Guide.
The Threats from AI
In addition to regulatory concerns, Barr highlighted the growing impact of artificial intelligence on the economy, warning that while AI could improve productivity and expand access to credit, it also risks reinforcing discrimination and disrupting labor markets if not carefully managed, Scotsman Guide reported.
He said early signs of labor disruption are emerging, particularly among younger workers in fields such as computer programming, though broader effects have yet to materialize. At the same time, Barr cautioned that AI-driven wealth creation could widen economic and racial disparities if gains are concentrated among capital owners.
Slow Job Growth
Barr noted that job growth has slowed significantly, with 181,000 jobs added in 2025, one of the weakest years for employment gains outside of recession periods. He also cited rising unemployment among Black and Asian workers, calling the increase in Black unemployment “disturbing,” even as overall jobless rates remain relatively low, Scotsman Guide reported.
He warned that the combination of weakening regulation, labor market fragility and potential external shocks could leave the U.S. economy vulnerable.
“The economy is at risk if there are further shocks to the system,” Barr said, according to Scotsman Guide.
