(Bloomberg) -- Financial stocks took a leg up after news that the Federal Reserve’s toughest watchdog on the industry resigned.

The Financial Select Sector SPDR ETF gained as much as 0.6% on Friday after Federal Reserve Governor Daniel Tarullo announced he will retire on or around April 5. Tarullo, who started his term a week after Barack Obama took office, also served as the central bank’s top regulator of Wall Street banks. The 64-year-old’s stint as governor wasn’t due to expire until 2022.

The policy maker was the point man in the development of new rules and regulations to safeguard the financial system in the wake of the 2008 financial crisis, and drew praise from Fed Chair Janet Yellen for his efforts. President Donald Trump has vowed to roll back financial regulation.

In a note to clients four minutes after the announcement, Neil Dutta, head of U.S. economics at Renaissance Macro Research, said simply, "Buy banks."

Financials stocks spiked before coming off their intraday highs.

"Tarullo is a bank regulator and the perception in the marketplace, rightly or wrongly, is that he is for tighter regulatory oversight and lower margins in the banking business," Dutta wrote. "Someone with more lax attitudes on regulation is likely to come out of this. Buy banks — the dog is running without its leash on."

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.