William C. Dudley, president of the Federal Reserve Bank of New York, will retire by the middle of next year, the bank announced Monday.
Dudley, 64, will also step down from his post as vice chairman of the interest-rate-setting Federal Open Market Committee. He has been closely aligned with Federal Reserve System Chair Janet Yellen and her predecessor, Ben Bernanke.
Dudley played a critical role in the Fed’s response to the 2007-08 financial crisis. A resident of suburban New Jersey, he has a keen interest in mass transit, affordable housing and other issues of concern to Long Islanders.
Dudley, in a speech on Monday to a Manhattan meeting of the Economic Club of New York, said his term of office ends in January 2019 and that by announcing his retirement now there will be more time for the New York Fed board of directors to identify his successor.
“I’m sad that I’m going to be stepping down,” he said, adding praise for departing Fed Chair Janet Yellen. “But it’s not just us, there’s lots of other people behind supporting the mission as well . . . It’s going to be fine.”
Dudley’s retirement news comes after last week’s nomination by President Donald Trump of Jerome Powell, a member of the Fed’s board of governors, to succeed Yellen. Powell must be confirmed by Congress.
Dudley told the luncheon audience of 460 business executives and economists that Powell and Yellen “are very much of the same mind” about interest rates. “There isn’t a lot of discord going into this transition.”
Yellen, in a statement, lauded Dudley’s service, which began in 2007 when he joined the New York Fed after working as chief economist for the investment bank Goldman Sachs.
“The American economy is stronger and the financial system safer because of his many thoughtful contributions. The Federal Reserve System and the country owe him a debt of gratitude,” she said.
Economist Lindsey Piegza at Stifel Financial Corp. in St. Louis, Missouri, noted Dudley’s early retirement adds to the number of vacancies on the Fed board.
“At this point, with longstanding vacancies left by Sarah Raskin and Jeremy Stein in 2014, and more recently the departure of Stanley Fischer last month . . . [the Fed board] already has three other vacant seats,” Piegza said.
Dudley downplayed the vacancies.
“I don’t think this is a key issue . . . This is all happening in an environment where there is broad consensus among the FOMC about what’s supposed to happen next and in an environment where the economy is pretty darn stable,” he told the economic club.
Dudley also warned Trump and Congress against rolling back the Dodd-Frank regulations adopted after the financial crisis to avert a future one.
“While it is appropriate to evaluate adjustments that might improve our regulatory regime, it is critical that we do not forget the hard-learned lessons of the crisis and—in the haste to reverse course—undermine the robustness and resiliency of the financial system,” he said. “I think it appropriate that changes be made carefully - with a paring knife, rather than with a meat cleaver.”
Dudley has taken an interest in Long Island since becoming bank president in January 2009. He has used his visits to businesses here to advocate for more funding for the Long Island Rail Road and to support housing near train stations.
“We’ve spent a lot of time traveling around the region trying to understand what’s working and what’s not working,” he said Monday. “We’re here for Main Street, we’re not here for Wall Street.”