New York Fed Names Dudley as New President

William Dudley, the head of market operations for the New York Federal Reserve Bank, will succeed Timothy Geithner at the helm of the most important regional Fed bank, the New York Fed said Tuesday.

Dudley, 56, a former Goldman Sachs chief economist, has played a central role in the Fed's response to the financial crisis, helping to design, develop and implement the U.S. central bank's emergency lending programs.

He takes over the top job at the New York Fed—the Fed's eyes and ears on Wall Street—at a time of great distress in the financial industry.

A Fed spokeswoman said Dudley would participate in and vote at the Fed's two-day policy meeting that kicks off Tuesday.

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"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 statement.

The job opened up when Geithner was sworn in as U.S. Treasury secretary Monday evening.

As head of the markets group, Dudley has managed the Fed's system open market account, which executes U.S. interest-rate policy through operations in the bond and money markets. He has also overseen foreign-exchange trading and provisions of account services to foreign central banks.

The role entailed briefing the Fed's policy-making Federal Open Market Committee about market developments. As president of the New York Fed, Dudley will be a permanent voting member on the panel, which meets on Tuesday and Wednesday to consider its next move.

"Bill has led our Markets Group at a crucial time and helped conceptualize, develop and manage many of the Fed's responses to extraordinary financial conditions. Under his leadership, the New York Fed will continue to work closely with the Treasury and the Board of Governors in dealing with the economic situation we confront,'' Denis Hughes, deputy chairman and a member of the New York Fed Board's search committee said in a statement.

At its last meeting in mid-December, the FOMC lowered its target for benchmark overnight rates to zero to 0.25 percent and said it was focusing its efforts to support the economy on actions to unclog frozen credit markets.

Before becoming the Fed's chief trader in 2007, Dudley was chief economist at Goldman Sachs. He had joined Goldman in 1986, working in a number of capacities, including as former Treasury Secretary Robert Rubin's senior economic adviser.

Prior to his years at Goldman, Dudley was in charge of regulatory analysis at J.P. Morgan, where he co-authored a pamphlet that advocated repealing the Glass-Steagall Act, a law put in place during the Great Depression to separate commercial and investment banking. Some economists have criticized the repeal of Glass-Steagall in 1999 as paving the way for the risk-taking that has led to the current crisis.

Dudley began his career as an economist at the Fed's Board of Governors in the early 1980s. He holds a PhD in economics from the University of California at Berkeley.

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