The Federal Reserve Bank of New York’s search committee has tapped San Francisco Federal Reserve Bank President John Williams as the next president of the New York Fed, concluding a search process that has drawn criticism for being inadequately considerate of candidates with more diverse backgrounds.
In a press release Tuesday, the New York Fed announced that Williams — a career Fed economist who has served as head of the San Francisco Fed since 2011 — would replace current president William Dudley, effective June 18.
“I am honored to have the opportunity to lead the Federal Reserve Bank of New York and to represent the diverse needs and economic challenges of all people living and working in the Federal Reserve’s Second District and as a member of the Federal Open Market Committee,” Williams said. “I look forward to joining the talented team of New York Fed colleagues and to carrying out the unique responsibilities entrusted to us to protect the economic prosperity and financial stability of the United States economy.”
Sara Horowitz, who co-chaired the search committee and chairs the New York Fed’s board of directors, said that Williams “best fulfilled the criteria” the committee had identified as critical for Dudley’s successor, and the committee voted unanimously April 2 to name Williams as the next president of the New York Fed.
“John cares deeply and is committed to the dual mandate and has led extensive work on the U.S. labor markets and employment,” Horowitz said. “He has meaningfully engaged with and supported the diverse communities that make up the San Francisco Fed’s district, and understands the different economic realities of its vast geographies and demographics, which have extensive parallels to the Second District, including Puerto Rico. And, John has always been willing to speak his mind and encourage the Fed to be forward looking and reflective.”
Dudley’s term as president expires in January 2019, but he said in an interview with American Banker on March 26 that he opted to retire early in order to give the search committee more time to find a suitable replacement.
The president of the New York Fed plays a unique role among regional Fed bank presidents in that it is the only regional Fed bank president with a permanent seat on the Federal Open Market Committee. The presidents of the Chicago and Cleveland Fed banks rotate onto the FOMC every other year, and the remaining regional bank presidents rotate onto the committee every third year.
The preeminence of the position has spurred some public advocates to call for the regional bank’s search committee to emphasize the importance of selecting either a woman or a person of color as the next leader of the New York Fed. In the history of the Federal Reserve System, the New York Fed has only been headed by white men.
During his testimony before the House Financial Services Committee in February, Fed Chairman Jerome Powell was peppered with questions about the vacancy at the New York Fed and the importance of selecting a diverse candidate to replace Dudley. Powell insisted that a diverse array of candidates would be considered and would have a “fair shot” at being selected.
“We always insist that there's a highly diverse candidate pool, and that diverse candidates are given serious consideration and every chance to become the successful participant in that process,” Powell said. “I can absolutely guarantee you that that will continue to be the case. We will always have diverse candidates. They will always have a fair shot.”
Community advocates railed against Williams’ nomination even before it was announced. Sen. Elizabeth Warren, D-Mass., called for Williams to testify before the Senate Banking Committee before he takes his seat, saying his lax oversight of Wells Fargo enabled that bank’s cross-selling problems to proceed unnoticed.
The Fed Up campaign — which pushes the Fed to consider the higher rates of unemployment among communities of color when setting interest rates — held a demonstration March 26 at the New York Fed’s headquarters in lower Manhattan based on reports that Williams was the leading candidate for the job.
Jordan Haedlter, campaign manager with Fed Up, said in an email exchange before Williams’ selection was announced that the selection committee should restart the process, and that of the women and minorities that had reached the final rounds of the selection process, none met the group’s criteria for both diversity and a lack of Wall Street ties. Williams, he said, “meets none of our criteria."
“We submitted a list of candidates to the NY Fed board: all were either Ph.D economists or former Fed/executive branch officials, and none were white men,” Haedtler said. “As far as we know, no one on our list was seriously considered.”
The search committee co-chairs said that each of the board’s candidates, including Williams, were recommended through multiple channels, so no one group or person would be responsible for initially floating a candidate. But the co-chairs also said none of the names submitted to the committee were dismissed out of hand, regardless of who was submitting the name.
The co-chairs also pushed back against the idea that Williams should not be considered or is unqualified because he is insufficiently diverse. His track record of community engagement in the San Francisco Fed district and his role in advancing the careers of women and minorities at the San Francisco Fed demonstrate his commitment to the welfare of all citizens within his district, the co-chairs said.