Dudley to Replace Geithner as Head of the New York Fed
Monday, January 26, 2009; 9:30 PM
William C. Dudley, a behind-the-scenes engineer in the Federal Reserve's response to the financial crisis, is being promoted to a starring role.
Dudley will be named president of the Federal Reserve Bank of New York tomorrow, sources familiar with the decision said, replacing Timothy F. Geithner, who was sworn in tonight as Treasury secretary. Dudley has been an executive vice president at the New York Fed since 2007, helping design numerous new programs to try to guard the financial system against the worst crisis in generations.
Dudley has been in charge of the bank's operations to manage the money supply by buying and selling Treasury securities, and was at Geithner's side through the bailout of Bear Stearns, the decision to allow Lehman Brothers to fail, and the government takeover of American International Group.
With his appointment, made by the New York Fed's board of directors and approved by Fed Chairman Ben S. Bernanke, those officials opted for continuity over abrupt change. Some of the other leading candidates for the job -- who were said to include Fed governor Kevin Warsh, New York Fed official Terrence Checki, and former Treasury official David McCormick -- have also been heavily involved in the government's response to the crisis.
Dudley is set to become the Fed's emissary to Wall Street, where he confronts huge challenges. He will be the primary regulator of the nation's largest financial institutions, including Citigroup and J.P. Morgan Chase. And he will play a leading role in managing the Fed's $2 trillion balance sheet, which has swollen as the central bank undertakes elaborate new efforts to try to restart lending through the economy.