NEW YORK — E. Gerald Corrigan, president of the New York Federal Reserve Bank and a powerful banking regulator, surprised Wall Street on Tuesday by announcing that he would resign and pursue a career in the private sector.
Corrigan, highly regarded for his handling of the 1987 stock market crash, offered no specific reason for his plans to end his 25-year career at the Fed on Aug. 20.
There were no policy or personality disputes behind his decision, Corrigan said, adding that his relationship with Federal Reserve Board Chairman Alan Greenspan remains excellent. Corrigan is considered by many bank analysts second in power to Greenspan and a likely successor if Greenspan chose to step down.
"There is no hidden story, there is no hidden agenda," behind his resignation, Corrigan told a news conference.
"I have always said that no one should be president of anything for too long."
Since leaving college in 1968, Corrigan spent his entire career with the Federal Reserve. He has served as president of the New York Fed since Jan. 1, 1985.
Although Corrigan, 51, said he was in excellent health, he made several references to the extraordinary demands of the job.
At the New York Fed and as an aide to former Fed Chairman Paul A. Volcker, Corrigan has been intimately involved in untangling a series of enormously complex issues. They include the Third World debt crisis, rampant inflation of the early 1980s, the banking crisis, the collapse of the Bank of Credit & Commerce International and the Salomon Inc. Treasury auction scandal.
Corrigan also chairs the influential Basel Committee on Banking Supervision, a key panel of international bank regulators. He has advised Russian President Boris Yeltsin and introduced Yeltsin to Wall Street executives. Last year, Corrigan formed the Russian-American Banking Forum to modernize Russia's antiquated banking system.
Volcker, a close friend and fishing partner, said in an interview that Corrigan hinted last year that he was getting weary of the demands of his job and considering resigning.
Corrigan said now was an appropriate time to leave, since the economy is regaining its health, inflation remains under control and the severity of the banking crisis appears to have passed.
But his departure caught Wall Street unprepared.
"It's a total surprise," said Elliott Platt, research director for Donaldson, Lufkin & Jenrette Securities Corp.
The New York Fed, the biggest operation in the Fed system, wields immense power in the government securities and foreign currency markets. It actively buys and sells bonds and currencies to manage exchange and interest rates. Corrigan plays a key role in supervising auctions of Treasury securities, which are critical to financing the national debt and keeping the government functioning smoothly.
Corrigan's departure, however, shouldn't signal a change in the nation's monetary policy, analysts said.
He is considered one of the unsung heroes of the 1987 market crash. Post-mortem accounts reveal that Corrigan had correctly worried that the crisis could lead to a national financial gridlock because bankers were refusing to grant credit to waves of desperate customers who needed cash to cover debts created by their withering stock investments.
With a chain reaction of large-scale defaults looming, Corrigan oversaw an emergency effort by the Fed to arm-twist bankers into lending the money.