April 5, 2012 / 11:14 PM / 5 years ago

N.Y. Fed's head of markets to leave after Twist

NEW YORK (Reuters) - Brian Sack, who oversees the U.S. Federal Reserve’s dealings with Wall Street and was seen as a “rising star” within the central bank, will resign from his post later this year, the New York Fed said on Thursday.

The unexpected resignation by Sack, 41, will become effective in September but he will be placed on leave after June 29. This coincides with the end of the Fed’s latest program to boost the economy, which he has been overseeing.

Sack has been the head of the New York Fed’s markets group since June 2009. His tenure includes the implementation of many of the central bank’s emergency measures to stabilize the banking system and pull the U.S. economy out the worst recession since the Great Depression.

“He was a young guy. He seemed to be a bright guy, he seemed to be doing a good job. I was very much surprised by it,” Michael Moran, chief economist at Daiwa Securities in New York sa id about the resignation.

Moran said he did not know Sack’s motivation for leaving the post.

“I was wondering about that myself but had not heard anything. I would imagine it has been a tough job in the past three years, and he might just be a little tired,” he said.

Sack will remain in his current position as head of the Markets Group and Manager of the System Open Market Account (SOMA) until June 29, 2012, to help ensure a smooth transition, the New York Fed said in a statement.

Sack will then be placed on leave until September 14, during which time he will have limited contact with the New York Fed and no access to the bank’s information, including Federal Open Market Committee and supervisory materials, the New York Fed said, adding it has started the search process for a replacement.

The end of June marks the conclusion of the Fed’s $400 billion program of selling shorter dated Treasury holdings and buying of longer dated debt.

The program, which markets have dubbed “Operation Twist,” is aimed at lowering long-term borrowing costs to help end the country’s prolonged housing slump.

Sack’s departure is not likely to affect Fed policy.

A Fed spokesman said Sack’s resignation was “entirely his own decision,” and he has not lined up another job after he leaves the New York Fed.

Sack replaced William Dudley, the current president of the New York Fed.

“I don’t think it will mean a lot for Fed policy. They pride themselves with having a deep bench and not being dependent on any single person,” said Julia Coronado, chief North America economist at BNP Paribas in New York.

Currently, the key question for Fed policymakers and investors on Wall Street is whether more monetary stimulus is needed to keep the sluggish economic recovery from fizzling.

Sack oversaw much of the Fed’s quantitative easing measures that have ballooned its balance sheet to $2.86 trillion through large-scale purchases of bonds.

Prior to joining the New York Fed, Sack was a vice president at M acroeconomic Advisers, an economic research firm b ased in Washington, wh ere he conducted extensive analysis of the interactions between Fed policies, financial markets and the U.S. economy, according to the New York Fed’s online biography on him.

Macroeconomic Advisers was co-founded by Laurence Meyer, who was a Fed governor from 1996 to 2002.

Before joining Macroeconomics Advisers in 2004, Sack was the head of the Monetary and Financial Markets Analysis section at the Fed’s Board of Governors. His responsibilities in that role included preparing materials on financial market developments for the policy-setting FOMC and briefing board members about those developments.

BNP’s Coronado, who knew Sack when they worked together at the Federal Reserve Board, said, “He was a ri sing star on the Board...He rose through the ranks very quickly.”

Additional reporting by Chris Reese; Editing by Diane Craft

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