William Dudley named NY Fed president
After Tim Geithner is voted in as Treasury secretary, the Federal Reserve Bank of New York selects a former Goldman Sachs chief economist as its leader.
NEW YORK (CNNMoney.com) -- The Board of Directors of the Federal Reserve Bank of New York appointed William C. Dudley as its new president, according to a statement from the district central bank released Tuesday.
Dudley was selected to succeed Tim Geithner, the former head of the New York Fed, the day after Geithner became the new Treasury secretary. Monday, Geithner was approved by Senate lawmakers to take the post formally occupied by Henry Paulson.
Dudley formerly served as executive vice president of the Markets Group at the New York Fed.
Dudley was partner and managing director at Goldman Sachs before he joined the New York Fed in 2007and for ten years, he was chief economist there.
Dudley earned his doctorate in economics from the University of Calif., Berkeley.
Dudley's "deep economics background, extensive working knowledge of the markets and hands-on policy making role make him an outstanding choice to succeed Tim Geithner," said Stephen Friedman, chairman of the New York Fed's Board of Directors, in a written statement.
The New York Fed president is the second most important official in the central bank's structure, behind the chairman. The president of the New York Fed is the only permanent member of the 12 district bank presidents on the Federal Open Market Committee (FOMC), which is the committee that sets the Fed's key lending target rate. The other 11 serve on a rotating basis.
The New York Fed also works with the nation's major Wall Street firms and most of the nation's major banks, which are based in New York.
Geithner was the Fed's leader in the orchestration of the plans to have JPMorgan Chase buy Bear Stearns in March to keep it out of bankruptcy, as well as the bailout of American International Group in September, because of his familiarity with the major New York financial institutions. Geithner was also a key player in the conversation about whether or not to rescue Lehman Brothers and the sale of Merrill Lynch to Bank of America.
The New York Fed buys and sells U.S. Treasurys, thereby working to maintain the target rate that the U.S. central bank establishes in the FOMC meetings. As the only district bank that can purchase Treasurys on the open market, the New York Fed plays a key role in guarding the key lending rate that the U.S. central bank sets.
"The New York Fed, standing at the critical intersection of the financial markets and the banking system, has a leading role to play in assisting in the reform of the architecture of the U.S. and global financial system to ensure that what has transpired over the past year can never occur again" Dudley said in a written statement.