WASHINGTON — William Dudley, president of the Federal Reserve Bank of New York and a key ally of Fed Chair Janet Yellen, will retire in mid-2018, creating another opening in the top ranks of decision-making at the nation’s central bank.
The New York Fed’s announcement Monday followed President Donald Trump’s nomination last week of Jerome Powell to replace Yellen as chair in February and the departure last month of Stanley Fischer as vice chair. There are also three additional vacancies on the Fed’s board.
As head of the New York Fed, Dudley, 65, is a permanent voting member of the Fed policymaking committee that sets interest rates. The committee is composed of the Fed’s seven board members and five of the 12 regional bank presidents. Unlike the New York Fed president, the other regional bank presidents vote on a rotating basis.
Trump hasn’t announced nominations for the three other board jobs, and Yellen hasn’t said whether she will remain on the board once her term as chair ends Feb. 3. Her separate term on the board runs until 2024.
The president nominates the Fed’s board members, who are subject to Senate confirmation. The 12 regional bank presidents are selected by their individual bank boards.
The New York Fed announced that a search committee had been formed to choose a successor to Dudley, who joined the New York Fed in 2007 after more than two decades at Goldman Sachs. After overseeing the New York Fed’s securities operations for two years, Dudley succeeded Timothy Geithner as president of the New York Fed after Geithner was tapped by President Barack Obama to become Treasury secretary in 2009.
The head of the New York Fed is a key policymaker in overseeing the nation’s financial system. Its powers include monitoring the nation’s largest banks in New York and handling the Fed’s buying and selling of government securities — the process it uses to manage interest rates.
Dudley won praise for the work he did with Geithner and Fed Chairman Ben Bernanke to contain the fallout from the 2008 financial crisis. A close ally of Yellen, Dudley supported her cautious approach to raising the Fed’s benchmark rate and the plan the central bank has begun to gradually shrink its $4.5 trillion balance sheet, which is five times its size before the financial crisis.
The balance sheet contains $4.2 trillion in Treasurys and mortgage bonds that the Fed bought since 2008 to try to hold down long-term borrowing rates and help the economy recovery from the worst recession since the 1930s.
In a statement, Yellen praised Dudley for his “wise counsel and warm friendship throughout the years of the financial crisis and its aftermath.”
The announcement from the New York Fed said Dudley intended to step down in the middle of next year to ensure that his successor would be in place well before the mandatory end of his term in January 2019.
