As the announcement of William Dudley, the current New York Fed president’s retirement in 2018 circulates the industry, determining his successor brings to light the necessary characteristics the next president should have—and who might already possess them.
The announcement made last week comes considerably before the end of his 10-year term, which is January 2019. The sudden and imminent departure of what some consider the second-most important job in the Federal Reserve system will bring with it a search that experts estimate will take six to nine months, according to a recent report published Monday by CNBC.
There are some names being discussed throughout the industry by Fed observers and financial market experts. Some of these names include, Peter Blair Henry, the youngest dean appointed to the New York University’s (NYU) Stern School of Business, Peter Fisher, former Treasury Undersecretary for Domestic Finance during the Bush administration, Sandie O’Connor, JPMorgan Chief of Regulatory Affairs, and Seth Carpenter, Chief Economist for UBS.
The President of the New York Fed is first among the 12 regional bank presidents. While he was New York Fed president, Dudley formed a triumvirate with Fed Chair Janet Yellen and former Vice Chairman Stanley Fischer. These three were in charge of Fed policymaking. The NY Fed president also serves as the vice chairman of the Federal Open Market Committee.
These duties make prior experience a key factor in the search for Dudley’s replacement. One of the biggest ongoing debates is whether or not the NY Fed president should be an economist. CNBC also said that the NY Fed is a job that requires a Ph.D. in economics. Dudley held the latter and was the former.
Finally, many are wary of a candidate with a background in banking due to the fact that Dudley’s retirement comes at a time when the Trump administration is likely to ease up on the Dodd-Frank Act. A candidate with a banking background also has the potential to be seen as beholden to financial institutions.
The soon-to-be vacant NY Fed president position also comes at a time when the Fed is under pressure to appoint more diverse presidents. According to a Brookings Institution statistic cited by CNBC, six out of 135 regional bank presidents have been women, and three have been nonwhites. Additionally, 11 of the regional banks have always had white presidents, and eight of those have never been led by a woman.
Additional names being mentioned include, Brian Sack, Chief Economist of Shaw, Robert Kaplan, Dallas Fed President, Lael Brainard, current Fed Governor, Simon Potter, current Head of Open Market Operations at the New York Fed, and Krishna Guha, Vice Chairman of Evercore ISI, and former EVP of the New York Fed.