NEW YORK — With Timothy Geithner nominated to move to the new administration as Treasury chief, there's speculation over who will take over the top job at the New York Federal Reserve at a time of considerable peril for the financial system.

Geithner and the bank he heads have played an unusually prominent role over the last year, serving in the front lines of government efforts to save Wall Street. The stakes for a new face at the most important regional Fed bank are high: his successor — there's little clarity who that may be yet — will take office as the crisis continues to burn.

The New York Fed did not respond to questions about the transition process.

Even in normal times, the New York Fed president occupies a unique perch in the Federal Reserve system. The official is second-in-command at meetings of the interest rate setting Federal Open Market Committee and holds a permanent voting slot on that body, unlike other regional Fed leaders.

The New York Fed president rarely makes waves on the monetary policy front. Instead, the official serves as the Fed's eyes and ears on Wall Street. When a crisis strikes, it's the New York Fed president that roles up his sleeves and goes to work.

Geithner has been integrally involved in Fed efforts to save Wall Street from collapse and played a leading role in controversial bailouts of Bear Stearns and American International Group.

His predecessor, William McDonough, helped bring together top banks to save foundering hedge fund Long Term Capital Management in 1998. Other New York Fed chiefs have had august careers both in and out of the institution. Paul Volcker went from the bank to chairman of the Fed and took the painful steps to bring inflation under control. Post Fed, Gerald Corrigan has worked diligently on efforts to help Wall Street identify and control risk.

The job requires a unique and expansive skill set. Miller Tabak's Tony Crescenzi said a New York Fed president needs the ability to "understand the complexities" of the current banking system and "in particular, the global money market."

Prospective Names
 
Given that Geithner was only formally tapped to fill the Treasury spot on Monday, names of replacements are few and far between. Some have said a good candidate could be current Fed governor Kevin Warsh, a former Morgan Stanley banker who has been an active participant in the Fed's crisis remediation efforts.

The New York Fed's own bench may also hold candidates. There's first vice president Christine Cumming, a long-time bank veteran who also attends FOMC meetings as an alternate member. Because of events, she even voted in Geithner's place at the Sept. 16 FOMC meeting.

Then there's William Dudley. He currently helms the Open Market Operations desk, which is charged with the technical task of implementing the central bank's monetary policy objectives. Dudley would be an attractive candidate, fusing his current managerial and technical experiences with his former role as chief economist with Goldman Sachs.

Dudley has also played a relatively prominent public role at the New York Fed and has given several important speeches about market related topics. The New York Fed's top job requires good communications skills, and Dudley has shown some aptitude for the task. Also, the official has been closely involved in the mechanics of Fed's crisis efforts, which is valuable given the still tender state of markets.

Tilting against Dudley, said one veteran Fed watcher, is the Goldman factor. The proliferation of former Goldman Sachs veterans throughout key government positions could in this case be a disqualifying factor, the economist said.

Outside of those names, a dark horse could easily get the nod. Past heads of the Fed's Open Markets desk, Peter Fisher and Dino Kos, who both occupy private sector financial jobs now, are plausible. Geithner was himself an unexpected pick after reports said several other leading contenders withdrew from consideration. Other recent regional Fed boss picks have also been surprises, so expecting the unexpected may be wise.

The process of resolving vacancies at regional Fed banks over recent years has proved relatively opaque and a curious reminder of the private/public structure of the central bank. As is the case for all regional Fed banks, Geithner's replacement will be selected by the board of directors at the New York Fed, subject to the approval of the Federal Reserve Board in Washington.

When former head McDonough retired at the start of 2003, the bank named an executive search committee to select a new leader. That said, the bank's board is ultimately responsible for the pick, and the current slate is populated by the likes of JPMorgan Chase leader Jamie Dimon and Jeffrey Immelt, chairman and chief executive officer of General Electric Co.

Another wildcard in the process is prospective length of the gap between Geithner's move to Treasury and the naming of a replacement. The current New York Fed chief faces the normal Washington process of Senate confirmation, which puts a question mark on the date of his actual departure, which would in any case be after the new president is inaugurated at the end of January.

Current conditions argue for a quick turnover, but the history is worrying. The last time the New York Fed got new management, the gap between bosses was lengthy. McDonough resigned in January 2003 and Geither replaced him in October of that year. It's hard to believe that with market conditions so unsettled there would be a repeat of that long search, but it could happen.

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