The Federal Reserve Bank of New York announced Tuesday that economist John Williams will be its next president and chief executive officer, one of the top leadership roles at the Federal Reserve that plays a large part in overseeing Wall Street.

Williams, who has led the San Francisco Federal Reserve Bank since 2011, will take control of the most prominent regional bank of the Fed. The New York Fed is unique among the Fed's 12 regional banks: It handles a lot of Wall Street supervision, and it buys and sells the Fed's holdings when needed. The leader of the New York Fed also gets a permanent seat on the committee that sets U.S. interest rates, which are currently at the highest level in a decade and expected to rise further soon.

The New York Fed leader was chosen by a selection committee and does not require confirmation from the U.S. Senate. His appointment has already been approved by the Federal Reserve board of governors in Washington, and he will take over in New York on June 18.

Williams is seen as a close ally to current Fed chairman Jerome H. “Jay” Powell, and he has always voted with the majority on interest rates and other key decisions, but his selection comes with an unusual amount of controversy.

Progressives, including Sen. Elizabeth Warren (D-Mass.) and Cory Booker (D-N.J.), are upset that the search committee is once again choosing a white male at a time when the Fed's leadership is already 80 percent male and 87 percent white. The New York Fed has never been led by anyone other than a white male during its 104-year history.

I am deeply concerned about the opaque process and disappointing outcome in the selection of the next president of the New York Federal Reserve Bank,” Rep. Ro Khanna (D-Calif.) said. “Decisions made in this position affect millions of Americans’ ability to find jobs, earn higher wages to provide for their families and develop bargaining power necessary to receive good benefits.”

Warren is also worried that Williams won't be a hard enough watchdog on big banks, and she is demanding that Williams and the heads of the search committee appear before the Senate Banking Committee, even though it is not required. There is ongoing debate in Congress about whether the federal government should have a role in the appointment of regional Fed presidents. There are 19 key leadership positions at the Fed: seven governors who serve in Washington and are nominated by the president and confirmed by the U.S. Senate and then the 12 regional Fed bank presidents who are selected by boards in each region.

Some on Wall Street are also concerned that Williams, a Stanford economist who has spent most of his career at the central bank, does not have enough experience with markets. Williams has made it a point to say he does not have a Bloomberg terminal on his desk, something that is ubiquitous for most Wall Street firms. In early February, as the market began to nosedive, Williams said in a speech that investors shouldn't expect a “knee-jerk reaction” from the Fed.

“I don’t see signs of an economy going into overdrive or a bubble about to burst, so I have not adjusted my views of appropriate monetary policy,” he said on Feb. 2.

But others said Williams will likely adjust to the new job with ease, including the market oversight.

“We have no doubt that Williams would be able to get up to speed quickly,” said Brett Ryan, senior U.S. economist at Deutsche Bank. “In our view, it is critically important that the New York Fed president have a deep background and understanding of money policy tools and implementation strategies — there are few that are more well suited than Williams in this respect.”

Williams has extensive experience in the Fed system. Before leading the San Francisco Fed, he was head of research there and a top staffer for former chair Janet L. Yellen. He began his career at the Fed in 1994 and is generally seen as a “centrist” who, like Powell, favors a slow and steady rise in interest rates as long as the economy continues to thrive.

“We think that Chairman Powell had a say in the position. Both have been on the FOMC since Powell became a board governor in 2012; the familiarity between the two was likely a factor weighing in Williams’s favor,” said Michael Gapen, chief U.S. economist at Barclays. “Since Chairman Powell is not a traditional economist by training, having Williams in the inner circle of the policymaking apparatus is, in our view, a positive factor in the selection.”

Many economists, including Yellen, applauded the selection of Williams for the job and believe he has shown an openness to embrace new ideas that they believe is needed at the Fed as the central banks tries to unwind an unprecedented amount of financial stimulus used to aid the country during the 2008-2009 financial crisis.

“I strongly support the appointment of John Williams,” said Yellen in a lengthy statement Tuesday. “John's groundbreaking research helped establish the intellectual foundation for the Federal Reserve's determination to support American households and businesses by pushing short-term interest rates very low and adopting non-traditional strategies to lower longer-term interest rates, such as those on mortgages.”

The economists also point out that Powell has an extensive markets background and that the top Fed leadership needed someone with a more traditional PhD in economics, such as Williams, to balance him out.

“The choice of John Williams ... represents a much needed economic ally for Chairman Powell,” said Diane Swonk, chief economist at Grant Thornton. “There is a need for diversity in the system. I don't see Williams as a rejection of that as much as an embrace of the legacy and a level of continuity provided by Yellen.”

The co-chairs of the search committee that picked Williams said Tuesday that he stood out because of his extensive knowledge of the Fed, his substantial contributions to research and his track record of community development and recruiting diverse staff at the San Francisco Fed. They were especially impressed that the senior executive ranks at the San Francisco Fed saw a large increase in minorities under his leadership.

Williams has spoken publicly about the need to diversify the Fed's ranks from top to bottom, saying in 2016 that “our record is not what it should be and change has been too slow.”

The search committee hired a search firm, Bridge Partners, to help look for female and minority candidates, as well as candidates outside of the business world. The co-chairs said Tuesday that they narrowed a list of hundreds of candidates down to 30 qualified ones and that half of those were either women, minorities or both. They then narrowed that group down to 13 candidates, six of whom were not white men. Williams was the only white man in the final pool of three candidates.

“After a thorough process, my fellow search committee members and I felt that John best fulfilled the criteria we'd identified as well as the feedback we'd received through our public outreach efforts,” said Sara Horowitz, co-chair of the search committee and founder of the Freelancers Union. The other co-chair was Glenn Hutchins, co-founder of investment firm North Island.

Warren has criticized Williams for being at the helm of the San Francisco Fed bank during the period when Wells Fargo, which is headquartered in San Francisco, was committing extensive fraud and abuse against millions of its customers. But regional Fed presidents outside of the New York Fed have little role in supervising big banks.

Williams said he was honored by the selection and that he was committed to representing the “diverse needs and economic challenges of all people living and working” in the New York Fed's district, which includes New York state, northern New Jersey, southern Connecticut, Puerto Rico and the Virgin Islands.

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