Top Federal Reserve district bank has seen many senior-level departures, raising concerns about its diminished heft and “swagger”
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This article is based on interviews with more than a dozen former New York Fed officials, along with longtime strategists, economists and traders at major banks and investment firms. Most of the people spoke on condition of anonymity to discuss sensitive issues. One longtime member of the New York team was Lorie Logan, who has risen within the Fed system to become head of the Dallas district bank after previously overseeing the central bank's giant securities portfolio under Williams. For investors, she’s become a key voice when it comes to thoughts on markets.
One New York-based market participant now conducts regular catch-ups with the Dallas Fed ahead of FOMC blackout periods — the period of days before policy announcements when central bankers don’t discuss the economy or potential decisions. That’s especially key now given how much monetary policy has changed over the past two decades, including a much bigger focus on the Fed’s balance sheet, he said. “Getting a really good understanding of not only economic conditions, banking conditions, financial markets, is really important.”
Greg Cavanagh held roles including deputy general counsel during his 17-year tenure at the bank before heading to the Clearing House Payments Co. Margaret McConnell, who started at the bank in 1996 and ran a special unit tasked with looking for weak points in Fed policymaking and economic and markets monitoring, retired in November.
Patricia Zobel, who served as the interim manager overseeing the Fed’s securities portfolio, was at the New York Fed for 22 years. Years of employment history at the New York Fed don’t necessarily guarantee an understanding of market dynamics. The Fed was surprised in 2019 when its first QT program triggered major problems in money markets. Last year, the New York Fed hired JPMorgan Chase & Co. strategist Joshua Younger for a senior policy adviser role. Younger earned respect from peers as a prescient voice, in the early days of the pandemic, on risks building in the US Treasury market.
Initiatives during Williams’ tenure by human resources staff to overhaul salary bands and revamp career progression frameworks appeared to leave less room for promotions at senior levels — incentivizing departures, people familiar with the matter said. “The New York Fed has lost its swagger,” said Glen Capelo, who spent more than three decades on Wall Street bond-trading desks and is now a managing director at Mischler Financial Group. “People used to want to go see the NY Fed, people were hoping they would call them. You don’t have that anymore.”
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