Dec. 1 (Bloomberg) -- Federal Reserve Bank of New York President Timothy Geithner, the nominee for U.S. Treasury secretary, will stay in his position for “several weeks” while leaving the Fed committee that sets the main U.S. interest rate.

Christine Cumming, the New York Fed’s first vice president, will attend the Federal Open Market Committee’s Dec. 15-16 meeting in Geithner’s place and vote on the panel’s decision, the Fed said today. The central bank created a search committee today and will also hire a national search firm “very soon,” the New York Fed said in a statement.

Leaving the FOMC would help Geithner avoid a conflict of interest or the appearance of one as he prepares to join President-elect Barack Obama’s administration. Presidents Bill Clinton and George W. Bush took a hands-off approach to the Fed’s monetary policy, and Obama has indicated he will do the same. The New York Fed president serves as vice chairman of the FOMC.

The search committee “will try to complete its work as promptly as it prudently can,” the Fed said. “In order to allow for an orderly transition, President Geithner will continue to serve as president of the New York Fed for the next several weeks.”

Departing Fed governors and district-bank presidents often skip their final FOMC meeting. Geithner, 47, was picked by Obama for Treasury secretary last week.

The search committee, which will also hire a national search firm “very soon,” consists of Stephen Friedman, chairman of the bank’s board, and directors Charles Wait and Denis Hughes, the New York Fed said today in a statement on its Web site.

Private-Equity Firm

Friedman, 70, is a former chairman of Goldman Sachs Group Inc., former White House economic-policy adviser and current chairman of Stone Point Capital LLC, a private-equity firm. Hughes, the board’s vice chairman, is president of the New York State AFL-CIO. Wait is chief executive officer of Adirondack Trust Co., a community bank in Saratoga Springs, New York, with $775 million in assets.

The New York Fed president is nominated by the bank’s board of directors, and the Board of Governors in Washington must approve the nominee, giving Fed Chairman Ben S. Bernanke say in the process.

In 2003, when Geithner was selected as president, other search advisers included Lawrence Summers, former Treasury Secretary Robert Rubin and former Fed Chairman Paul Volcker, all Obama advisers.

Cumming, 56, who has worked at the Fed for three decades, is the No. 2-ranking official and designated alternate for Geithner at FOMC meetings in Washington.

Negotiated Bailout

She substituted for Geithner at the Sept. 16 FOMC meeting, when policy makers voted to leave the benchmark rate at 2 percent. Geithner stayed in New York as officials negotiated the $85 billion bailout of insurer American International Group Inc.

Before her promotion to first vice president in 2004, Cumming served as the bank’s research director for four years. She also has experience in bank supervision, serving as a senior vice president in that division of the Fed from 1994 to 1999. She began her career at the central bank as an international economist in 1979.

Economists have said Cumming is unlikely to be a permanent replacement for Geithner as president. Instead, Bernanke may turn to Fed Governor Kevin Warsh or New York Fed markets chief William Dudley, who have been closely involved in efforts to combat the financial crisis, Fed watchers say. Warsh served under Friedman in the White House in 2004.

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net

Last Updated: December 1, 2008 12:14 EST