Daniel Tarullo will resign from the Federal Reserve's Board of Governors on or around April 5, according to a statement on Friday.
Tarullo, 64, a central bank governor since 2009, oversaw the Fed's annual stress tests, set up in the aftermath of the 2008 financial crisis to ensure banks big enough to threaten the US economy if they failed could withstand severe downturns.
His term doesn't expire until 2022.
Tarullo's exit will create a third opening on the Fed's board of governors.
"Populist forces remain strong within Team Trump.so there is risk that the replacement could be tougher on the biggest banks than Tarullo, rather than easier".
"The government's future approach to bank capital depends on the president's pick for vice-chairman for supervision at the Fed, Comptroller of the Currency and FDIC chairman", Seiberg said.
"It has been a great privilege to work with former Chairman Bernanke and Chair Yellen during such a challenging period", Tarullo said in the letter. Trump's administration backs looser regulation, and House Financial Services Committee Chairman Jeb Hensarling, R-Texas, has proposed conducting the reviews every other year rather than annually and barring the Fed from using the less-defined qualitative assessments as grounds to block capital payouts. But the Obama administration never filled the post, reflecting in part the sharp disagreements between Democrats and Republicans in Congress over how the financial system should be regulated.
He "made invaluable contributions across the entire range of the Fed's responsibilities", Yellen said in a statement.
He has been held in high esteem by financial regulation advocates like Better Markets President and Chief Executive Dennis Kelleher.