2 Execs at New York Fed to Leave

The abrupt departures come at a delicate time for the central bank as it finishes shrinking its balance sheet. The wind-down process, which Potter oversees as the head of the New York Fed’s markets group, will end later this year but policy makers have yet to decide important questions on the long-term maturity composition of its bond holdings.

“I’m very surprised that both of them would do this on the same day with three days notice,” said Tom Simons, a senior economist at Jefferies in New York.

Simons said Potter’s job, as head of the central bank’s open-market operations, is “arguably more important than being president of the some of the regional Fed banks.”

He said the departures are especially worrying for market participants given the uncertainty hanging over the New York Fed’s plan, in conjunction with the U.S. Treasury, to replace the scandal-tainted London InterBank Offered Rate with a new dollar-based benchmark rate, known as the Secured Overnight Financing Rate.

Potter was scheduled to give a speech in Hong Kong on May 30 on the transition from Libor but now won’t deliver those remarks, said New York Fed spokesman Jack Gutt.