McDonough, N.Y. Fed's New Boss, Seen as Much like His Predecessor

Article excerpt

In naming William J. McDonough as the new president of the Federal Reserve Bank of New York, the bank's search committee picked a banker very much in the mold of his predecessor, E. Gerald Corrigan.

The appointment of Mr. McDonough, 59, to the second-most-powerful position in the Federal Reserve System, was announced on Friday.

Mr. McDonough, who assumes the post today, spent most of his career at First Chicago Corp., where he rose to the level of vice chairman. After leaving the bank, he was recruited by Mr. Corrigan to join the New York Fed. He arrived in January 1992 as executive vice president in charge of the foreign desk, which oversees the Treasury Department's foreign exchange trading operations.

Field of 60 Candidates

Mr. McDonough was one of 50 candidates considered by the bank's search committee, said Ellen V. Futter, chairman of the New York Fed board of directors. He was chosen for his "broad-based knowledge of the workings of financial institutions and financial markets, both nationally and internationally," said Ms. Futter at a new conference.

Mr. McDonough is expected to follow Mr. Corrigan's views on monetary policy. Though somewhat more centrist on inflation, he would make preemptive strikes if inflation were to rise, said David G. Jones, a Fed watcher at Aubrey G. Lanston & Co.

Not an Inflation Hawk

Mr. McDonough said he will push for sustained economic growth through price stability and low levels of inflation, but added that he is not a hawk. …