New York Fed Board Starts Talks With Possible Dudley Successors

  • Dudley’s exit part of big transition in Fed leadership
  • Recruitment placing emphasis on need for more diverse leaders

William Dudley

Photographer: Scott Eells/Bloomberg

The Federal Reserve Bank of New York’s board of directors has started preliminary discussions with potential candidates to succeed President William Dudley, who plans to retire later this year.

The conversations are initial interviews with an eye toward getting to know the field of candidates, according to people familiar with the process, though the selection may still take several months. Dudley has said he will retire in mid-2018. A spokesman for the bank declined to comment.

The New York Fed shakeup is arguably the second-most important leadership change at the U.S. central bank this year after Jerome Powell’s replacement of Janet Yellen as chair next week. The role of Fed vice chairman is also vacant.

The New York Fed president serves as vice chairman on the interest-rate setting Federal Open Market Committee and has a permanent vote on monetary policy. The new leader will work closely with Powell on interest-rate strategy and the exit from crisis-era policies at a time of mounting global growth, equity markets near record highs and stubbornly low inflation.

U.S. financial conditions have eased despite five rate hikes since December 2015. The New York Fed also supervises Wall Street banks and serves as the central bank’s command center for the execution of monetary policy in the bond markets.

Diversity Focus

The New York Fed board is paying close attention to the need for diversity in its upper ranks. Under Yellen, the first woman to hold the Fed’s top job, six of the 12 regional Fed banks have picked new leaders -- all but one of them men. Loretta Mester, the president of the Cleveland Fed, was the exception. Fed leadership is also lacking racial diversity: Raphael Bostic in Atlanta became to the first black person to lead a Fed bank when he took the position last year.

The New York Fed’s search committee consists of four board members co-chaired by Sara Horowitz, founder and executive director of the Freelancers Union, and Glenn Hutchins, co-founder of private-equity firm Silver Lake. They’ve hired executive search firms Spencer Stuart and Bridge Partners, which focuses on diversity, to help with the process.

The search committee hasn’t publicized a long list, but New York Fed directors and the two search firms they’ve hired to help with the process have been checking with advisory groups to come up with potential candidates.

Long List

Among the names floated during those discussions were Peter Blair Henry, the former dean of New York University’s Stern School of Business; New York Fed official Simon Potter, who runs its markets group; and Brian Sack, who previously held that position. Former Fed and Treasury economist Karen Dynan has been suggested, as has Northwestern University economist Janice Eberly, JPMorgan Chase & Co.’s Sandra O’Connor, and UBS economist Seth Carpenter, a former senior adviser at the Fed Board in Washington, according to people familiar with the process.

Among those who may be also be considered are Mohamed El-Erian, chief economic adviser to Allianz SE, and Jason Cummins, the chief U.S. economist at Brevan Howard Inc.

All have either declined to comment or haven’t responded to a request for comment. It’s not clear who has been interviewed, and the search committee itself hasn’t indicated who it’s considering.

When the New York Fed selects the candidate, the name will be sent to the Fed Board in Washington for final approval.

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