Updated with correction
The Federal Reserve Bank of New York has created a search committee to replace President Timothy Geithner, who was nominated last week as Treasury secretary.
The three-member search committee, headed by Stephen Friedman, chairman of the New York Fed board and former chairman of Goldman Sachs Group Inc., will engage very soon a national search firm to assist in the process, the New York Fed said in a statement posted on its website.
Mr. Geithner will continue as New York Fed president for several more weeks while he awaits Senate confirmation as Treasury secretary; Christine Cumming, the New York Feds first vice president, will replace him as voting member on the rate-setting Federal Open Market Committee.
According to industry sources, the most likely candidates are current or former New York Fed officials in a key position within the central bank as head of the FOMCs System Open Market Account. The New York Fed manages all of the U.S. central bank assets via SOMA.
The Feds balance sheet has swollen to such levels and has become so diversified that it is important for the New York Fed president to have a deep knowledge of all market operations, said one source at a primary dealer who asked not to be named.
Among the candidates:
William Dudley, New York Fed executive vice president of the Markets Group and manager of SOMA. He joined the New York Fed in 2007 after serving as chief economist at Goldman Sachs for 10 years.
Peter Fisher, co-head of the fixed income portfolio management group at BlackRock Inc., New York; he previously served at the Treasury and the New York Fed.
Dino Kos, former Hong Kong-based managing director and head of central banks and sovereign wealth funds at Morgan Stanley Investment Management. He is now managing director for equities at Portales Partners, an independent research firm. Between 2001 and 2007, Mr. Kos was New York Fed executive vice president of the Markets Group and manager of SOMA.
Like for any of the 12 Fed presidents, the recommendation of the New York Fed board has to be approved by Fed Chairman Ben Bernanke and the full Fed Board.
It will have to be accounted for who is acceptable to the Federal Reserve Board. I would imagine they would take particular interest in the nominee for New York, said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, N.J.
Mr. Dudley, the current New York Fed executive vice president of the Markets Group, has long experience, both in economics and capital markets. As manager of SOMA, Mr. Dudley supervises the Feds U.S. and foreign market operations as well as the services it provides to other central banks.
Mr. Dudley joined the New York Fed in 2007 after serving as chief economist at Goldman Sachs, New York, for 10 years. Previously, Mr. Dudley, who holds a Ph.D. in economics from the University of California, Berkeley, also served as an economist at the Fed Board, from 1981 to 1983.
Another candidate, Mr. Fisher, joined BlackRock in 2004. He had been at Treasury, where he was undersecretary for domestic finance, since 2001. In that role, he advised the Treasury secretary about financial institutions, public debt management, capital markets, federal lending and government-sponsored enterprises all issues that are at the center of the credit crisis President-elect Barack Obamas administration will have to deal with. Prior to joining Treasury, Mr. Fisher, who holds a J.D. degree from Harvard Law School, also was at the New York Fed in the same position as Mr. Dudley has now.
Between 2001 and 2007, Mr. Kos was New York Fed executive vice president of the Markets Group and manager of SOMA, where, like his peers, he also oversaw the Feds trading activity in the repo, Treasury and foreign exchange markets. Mr. Kos joined Morgan Stanley Investment Management in August 2007 as managing director and head of central banks and sovereign wealth funds, based in Hong Kong. He joined the New York Fed in 1985 and held the position of manager in the bank supervision group.
Mr. Kos, who holds a B.A. in economics from the State University of New York, Albany, and an MBA in corporate finance from New York University, left Morgan Stanley earlier this year to join Portales.