WASHINGTON - Nearing the end of an arduous revamp of international capital standards, William J. McDonough on Thursday unexpectedly announced plans to retire July 21 after 10 years as the president and chief executive officer of the Federal Reserve Bank of New York.
Mr. McDonough, 68, has led a global effort to modernize bank capital as the chairman of the Basel Committee on Banking Supervision, a unit of the Bank for International Settlement in Basel, Switzerland.
The central banker, who is also the vice chairman of the Federal Open Market Committee, declined interview requests yesterday, but his spokesman said that Mr. McDonough expects regulators to finish writing the new Basel capital accord before he retires. It would then go through a last round of public comment before being finalized by yearend.
Controversy and delay have plagued the complex plan, but industry sources said Mr. McDonough's work had kept the proposal afloat. Bankers have argued for changes, but most support the overall effort and applaud the New York Fed chief's tenacity.
"This guy has been a missionary. McDonough has really piloted the whole aria of Basel II capital reform," said Maurice H. Hartigan 2d, the president of RMA-the Risk Management Association, the Philadelphia trade group that represents senior-level lenders keenly interested in how much capital must back their loans.
Mr. McDonough got the Basel job in June 1998 and by September was talking about updating the 1988 Basel accord.
"Bill has had a fantastically draining travel schedule over the past four years," Comptroller of the Currency John D. Hawke Jr. said in an interview Thursday. "He's been all over the world promoting Basel."
Asked if he thought the new capital rules would survive without Mr. McDonough, Mr. Hawke said, "I don't think his departure is going to torpedo the process, but a lot depends on how strong the next chairman of that committee is."
Mr. McDonough submitted his resignation during a meeting of the New York Fed's board. Its chairman, Peter G. Peterson, said an advisory committee would be formed to find his successor. An obvious candidate is Peter R. Fisher, who left the New York Fed after 15 years to join the Treasury Department in August 2000 as the under secretary for domestic finance.
Mr. Fisher, who was an executive vice president in charge of open market operations at the New York Fed, would not answer questions about his future but released a statement lauding Mr. McDonough: "His knowledge of our financial system made the world a better place as we faced the many challenges of the last decade. It was a privilege to work for him."
Federal Reserve Board Chairman Alan Greenspan also issued a short statement: "I will greatly miss Bill McDonough's counsel and advice. After a decade of exemplary service … his retirement will leave a pronounced void."
Mr. McDonough joined the New York Fed in January 1992 as an executive vice president. Before that he had spent 22 years at First Chicago Corp.
