In replacing Dudley, New York Fed aims to avoid political pitfalls

NEW YORK (Reuters) - Unions and groups advocating for retirees, teachers, housing, and workers’ benefits are among those visiting the ornate conference rooms of the Federal Reserve Bank of New York to lobby for a less conventional candidate to serve as its next president.

FILE PHOTO: William Dudley, President and CEO of the Federal Reserve Bank of New York, addresses the Economic Club of New York at a luncheon in the Manhattan borough of New York City, U.S. November 12, 2015. REUTERS/Mike Segar/File Photo

New York Fed directors leading the search for a successor to chief William Dudley, seen as the second most influential policymaker at the U.S. central bank, invited the guests to last week’s meeting to seek their advice. According to attendees and others familiar with the search, the directors are close to a “long list” of candidates and appear set to begin formal interviews within weeks.

Until then, directors Sara Horowitz and Glenn Hutchins are taking steps intended to head off any criticisms of opacity and lack of diversity that, in recent years, have stung presidential searches at other district Fed banks. The afternoon meeting with 11 advocacy groups last week marked what one attendee called an unprecedented gesture of public outreach.

“I got the impression they wanted candidates at least at the (initial) interview stage to have diversity of background, race, ideology. But they played it close to the vest ... and it’s hard to say who they might ultimately pick,” said Marcus Stanley, who attended the meeting and who is a policy director at Americans for Financial Reform, which wants the New York Fed to resist deregulation momentum in Washington.

The New York branch executes the Fed’s policy decisions and manages its trillions of dollars of assets. Its president is the only one among the 12 districts to have a permanent vote on policy and, historically, has tended to be a banker or market economist with Wall Street or Treasury experience.

The Jan. 10 meeting was one of at least seven since November with members of small businesses and banks, as well as large investment funds and industry groups, as the New York Fed continues to canvass for candidates, according to published notices of the meetings and people familiar with them.

Dudley announced on Nov. 6 he would step down a bit early, in mid-2018. Since then national interest in the search has grown and taken increasingly political tones given the New York Fed sits at the center of U.S. monetary policy, financial markets and the policing of Wall Street.

Upping the ante in New York is a historical Fed leadership overhaul in which U.S. President Donald Trump decided to replace Chair Janet Yellen with Jerome Powell, a Fed governor, and a Republican push to loosen bank rules. Liberal groups do not want a former banker or Fed insider, and point out that Dudley and his predecessors were all white and male.

Horowitz and Hutchins invited the advocacy groups and unions and asked for potential candidate names, according to two people at the meeting and one briefed on it. They said that while no names were offered at the time, a few attendees aim to submit them before month’s end.

The New York Fed declined to comment.


Four New York Fed directors will choose the candidate, though he or she must be approved by the Fed Board of Governors in Washington. Neither Congress nor the White House play a role.

Reuters reported in December that directors were considering candidates with a range of professional, racial and gender backgrounds including Peter Blair Henry, the just-retired dean of New York University’s Stern School of Business.

Last week’s 90-minute meeting included New York and New Jersey housing and community-development groups, the American Federation of Teachers, the Building and Construction Trades Council of Greater New York, and the American Association of Retired Persons, among others.

Horowitz, founder of the Freelancers Union which advocates for independent workers, told attendees that last year’s selection of Raphael Bostic as Atlanta Fed president set a good example of looking beyond the traditional mold given his economic expertise in housing policy, according to two attendees.

Bostic is the first black district president in the Fed’s 104-year history. Three of six new Fed presidents in the last five years were white men and two of those, Philadelphia Fed President Patrick Harker and Thomas Barkin of the Richmond Fed, were former district directors.

“Bostic really fits the profile of not coming from the typical Wall Street or internal Fed sources, and yet he is eminently qualified,” said Shawn Sebastian, director of the Center for Popular Democracy’s “Fed Up” campaign, and who also attended the meeting.

Horowitz and Hutchins, a tech investor and noted public-policy philanthropist, indicated it would be “a matter of weeks, not months” before they began face-to-face interviews with candidates, Sebastian said.

“This invitation is unprecedented,” he added, noting search committees at Fed branches declined requests for such meetings in recent years. “It’s a very important step.”

Reporting by Jonathan SpicerEditing by Chizu Nomiyama