“He understood there were risks of both action and inaction,” Fisher said.

Terror Attack

Two days after the Sept. 11 terrorist attacks, which destroyed the World Trade Center towers that stood a few blocks from the New York Fed’s main office in lower Manhattan, McDonough explained to fellow Fed officials the daunting task of restoring everything from phone lines to public confidence.

The New York Fed could receive calls, but couldn’t initiate any. There were rumors that a nearby building, One Liberty Plaza, was at risk of falling or collapsing -- a scenario McDonough said threatened to cause a “monumental asbestos problem,” according to a transcript of the Sept. 13, 2001, meeting of the Federal Open Market Committee. Stock markets were closed, and McDonough conveyed Wall Street’s view that the Fed needed to help restore a sense of normalcy.

‘Traumatized People’

“It’s very interesting that some fairly traumatized people, even though they try to appear very cool as the heads of major institutions, believe that the confidence they have in the Federal Reserve is a very important asset our country has at the moment,” McDonough said.

Twelve months after the attacks, he gave a speech at Trinity Church near where the towers had collapsed, calling attention to the disparity between rich and the poor and suggesting that Wall Street executives’ compensation was out of line.

“I remember it well because, on the first anniversary of 9/11, I had said to Bill, this is not the right speech for the first anniversary of 9/11. You should do something else,” said Tom Baxter, a former colleague who’s now at Sullivan & Cromwell LLP. “And he said, ‘No, I really think this is an important topic, and it’s important to me, and I’ve got to do it, and I’ve got the platform.’”

Former New York Fed first vice president Ernest Patrikis said McDonough had a great ability to address a group, whether five or 500 people, “He could turn on the Irish charm” when he had to, Patrikis said.

After leaving the Fed, McDonough was appointed by the Securities and Exchange Commission to head up the accounting oversight board.