The name most U.S. voters associate with the Federal Reserve is that of its chair, a role occupied in recent history by Alan Greenspan, Ben Bernanke and then Janet Yellen.

Less visible but almost as important is the president of the central bank's New York branch, who holds a permanent seat on the monetary policy committee and has supervisory responsibility over some of the biggest U.S. financial institutions, including American International Group Inc. (AIG) , JPMorgan Chase & Co. (JPM) , Morgan Stanley (MS)  , Citigroup Inc. (C) and Goldman Sachs Group Inc. (GS) .

The post, once occupied by Timothy Geithner, who went on to become President Barack Obama's first Treasury Secretary, has been held for the past seven years by former Goldman economist William Dudley. His retirement in the middle of next year, announced Monday, Nov. 6, creates yet another opening in the top echelons of the U.S. central bank.

"This will be the second-most important nomination within the Federal Reserve system," after President Donald Trump's selection of Fed Governor Jerome Powell to succeed Chair Janet Yellen, Barclays Plc economist Michael Gapen said in a note to clients. 

What the change at the New York Fed means for short-term interest rates, which are set by a committee consisting of seven Federal Reserve governors, the New York Fed president and four rotating regional presidents, has yet to be seen. The group is officially known as the Federal Open Market Committee.

Investors have been conditioned "to focus on the big three of the FOMC: the head, the vice chair, and the head of the New York Fed," Bank of America economist Michelle Meyer said in a telephone interview. "Markets have put more emphasis on the communication coming out of those three and downplayed communications from the other Fed officials."

With new people in all three roles after the mid-October retirement of Federal Reserve system Vice Chair Stanley Fischer, "the risk is that communication would be disrupted," she said.

And those aren't the only shifts for the central bank. Two more governorships, which are filled by presidential appointments, are also open, and whether Yellen will stay on as a governor isn't yet clear. While Fed chairs serve a four-year term, governors have a tenure of up to 10.

Unlike them, regional presidents aren't appointed by the White House. They're selected by the boards of each of the branches, subject to approval of the Federal Reserve system's board.

New York's search will be handled by the board members unaffiliated with banks, including Chair Sara Horowitz, director of the Freelancers Union; Glenn Hutchins, co-founder of private equity firm Silver Lake Partners; Honeywell International Inc. chairman Dave Cote and Denise Scott, executive vice president of the Local Initiatives Support Corp. The committee has hired search firms Spencer Stuart and Bridge Partners to assist.

While it will consider candidates nationwide, the panel is also likely to look at Simon Potter, head of the New York Fed's markets group; and Brian Sack, who headed the markets group from 2009 to 2012 and now works for investment firm D.E. Shaw, Gapen wrote.

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Potter, 56, has held his current post since June 2012 and was previously a senior adviser at the Treasury Department, according to BoardEx, TheStreet's relationship-mapping service. He has a doctorate from the University of Wisconsin and bachelor's and master's degrees from Oxford University.

Sack, 47, holds a doctorate in economics from the Massachusetts Institute of Technology and a bachelor's degree from the University of Vermont, according to BoardEx. He became head of the New York Fed's markets group, where he was responsible for buying and selling securities to implement the Fed's interest-rate policy, in 2009, when Dudley -- who previously held the role -- was promoted to president.

"For someone who has always had an interest in public policy and service, leading the New York Fed and being a member of the Federal Open Market Committee has been a dream job," Dudley said in a statement Monday.

The position afforded him a chance to help steer the Fed through seven years of near-zero interest rates after the 2008 financial crisis, as well as the build-up and now the wind-down of a $4.5 trillion securities portfolio amassed as the central bank sought to inject liquidity into the U.S. economy.

"I have deeply appreciated Bill Dudley's enormous contributions to the Federal Open Market Committee, his wise counsel and warm friendship throughout the years of the financial crisis and its aftermath," Yellen said in the statement. "The American economy is stronger and the financial system safer because of his many thoughtful contributions."

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Editors' pick: Originally published Nov. 6.

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