Federal Reserve Bank Of New York Announces Senior Management Shake-Up

The Federal Reserve Bank of New York has reassigned veteran foreign exchange chief Margaret (Gretchen) Greene a senior vice president, as part of a wider reorganization. Effective immediately, the Fed's foreign exchange function will be headed by senior vice president Peter Fischer, who was formerly the bank's vice president with day-to-day managerial responsibility for foreign exchange.

According to market sources, the changes are the work of recently appointed New York Fed president William McDonough who is effectively recasting the bank in his image.

Greene has been reassigned as the officer in charge of the Fed's newly-created economic studies function, which falls under the reorganized research and marketing analysis group, according to Fed officials. Greene now reports to Richard Davis, who heads the research group.

Separately, the Fed's FX desk has lost two of its half-dozen traders. Deputy chief dealer David Mushlitz is joining Fidelity Investments in Boston and trader/analyst Peter Michaels recently left the bank to join Fuji Bank in New York as a corporate FX trader.

According to several market sources, Greene's move out of foreign exchange comes as a surprise to many in the market, who long ago dubbed her "the grand old lady of the Fed." Greene has been at the Fed for nearly 25 years.

Greene joined the bank in 1967 as an economist in the foreign research division of the international research department. After assignments in both the research and foreign departments, she was named manager of the foreign department in 1972, say Fed officials.

Most recently, Greene was in charge of foreign exchange trading, reporting to McDonough. Although Greene ostensibly headed FX, she never officially held that position, instead reporting to the head of the bank's foreign operations, officials say.

During her tenure, Greene was instrumental in establishing the FX Committee, an independent body that advises the New York Fed on market-related issues, which was established in June 1978. But she now relinquishes her position on the committee to Fischer, who will represent the Fed at those meetings.

Now at the helm of the foreign exchange function, Fischer will oversee the New York Fed's five sub-departments: trading and analysis, reserve management, account management, the Foreign Exchange Committee, and operational support and data management. He reports directly to McDonough--effectively eliminating a layer of management.

Fischer also takes over as manager of foreign operations for the Federal Reserve System's Federal Open Market Committee (FOMC). This responsibility includes implementation of monetary policy directives on foreign exchange that are issued by the FOMC, say Fed officials. McDonough previously had this job when he was executive vice president in charge of the New York Fed's foreign and domestic trading.

Fischer joined the bank as a law clerk after graduating from Harvard Law in 1985. By 1988, he was appointed an officer, as associate counsel. In 1989, he spent 18 months working on a study of interbank netting arrangements for the G-10 and the Basle-based Bank for International Settlements. Then, in October 1990, Fischer returned to the bank, and was designated an assistant vice president, assigned to foreign exchange. About a year ago, Fischer was made a vice president, officials say.

In addition to these changes, three other officers were handed promotions to senior vice president positions, and five officers were promoted to vice president. Of those promoted to SVP spots, all were given new assignments, but only Fischer's promotion and Greene's reassignment directly affect foreign exchange.

Just 18 months after joining the Fed, McDonough was named as retiring president Gerald Corrigan's replacement in July. McDonough was brought on board at the Fed as executive vice president for foreign operations (which includes the FX area), and manager for foreign operations of the Systems Open Market Account, replacing Sam Cross, who retired in December 1991 (FX Week, Jan. 10, 1992).

Prior to joining the Fed, McDonough was vice chairman of the board of First Chicago Corp. in Chicago, and a director of the bank's holding company until his retirement in 1989. Between his retirement and joining the Fed, McDonough was an advisor to the World Bank and International Finance Corp, as well as a special advisor to the president of the Inter-American Development Bank.