A senior supervisor at the Federal Reserve Bank of New York is planning to resign at the end of the year. The departure of Sarah Dahlgren comes as the regulator is struggling to oversee the nation’s large and complex banking sector.
The New York Federal Reserve Bank announced on Thursday that Sarah Dahlgren, a 25-year veteran and currently serving as an executive vice president, will be leaving at the end of December. Dahlgren will leave her current position to be employed as a senior adviser as of October first of this year, before moving on to other pursuits at the end of 2015.
The New York Fed noted in a statement released Thursday that it would immediately start to look for a replacement in consultation with the Fed’s board of governors.
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More on Sarah Dahlgren
Dahlgren, 51, rose through the ranks at the bank, beginning as a staff bank examiner in 1990. Ex-NY Fed President and U.S. Treasury Secretary Timothy Geithner chose her to lead the government bailout of American International Group, and Dahlgren received favorable reviews as the insurance titan managed a turnaround, pulled off a successful IPO to pay back the Fed. As head of the New York Fed’s Financial Institution Supervision Group, Dahlgren oversaw a staff that regulated giant financial institutions J.P. Morgan and Goldman Sachs.
“Sarah drew on the lessons of the financial crisis to implement significant reforms and innovations in how we supervise the largest institutions,” NY Fed President William Dudley said in Thursday’s statement. “I accepted her resignation with great regret and wish her well.”
Dahlgren was appointed head of supervision in 2010. Of note, that was the year the Fed created a new internal structure that moved a good bit of regulatory decision-making from away from New York to Washington D.C.
Federal Reserve facing regulatory challenges
Financial industry analysts point out Dahlgren is departing as the NY Fed faces questions over its regulatory authority as power transition has centralized more decision-making authority in DC. Of note, the Fed inspector general said the New York Fed played a role in the “London Whale” trading losses at JPMorgan, and New York Fed President William Dudley was questioned harshly in a congressional hearing regarding his connections to Wall Street.
According to a knowledgeable Wall Street Journal source, the Fed board of governors was not involved in Dahlgren’s decision to leave the bank.