Stanley Fischer, Ex-Bank of Israel Chief, Tapped for Federal Reserve

Joins Janet Yellen as Vice Chairman of Bank

By Reuters

Published January 10, 2014.
  • Print
  • Share Share

President Barack Obama on Friday nominated former Bank of Israel Governor Stanley Fischer to be vice chairman of the Federal Reserve, and tapped two others to round out the U.S. central bank’s top ranks just as it begins winding down its historic economic stimulus.

Fischer, an experienced crisis manager and one of the world’s most prominent economists, would succeed Janet Yellen, who is set to take the Fed’s helm when Chairman Ben Bernanke’s term expires at the end of this month.

Obama also nominated Lael Brainard, who recently was the U.S. Treasury’s top official for international affairs, to serve on the Fed board, and renominated Fed Governor Jerome Powell, whose current term ends on Jan. 31.

All three need to be confirmed by the Senate.

The two new voices at the Fed’s table are unlikely to alter the policy consensus as the central bank scales backs it aggressive bond-buying campaign, analysts said.

While Brainard, a veteran of Democratic administrations, is seen as inclined to be particularly focused on fostering faster jobs growth, Fischer, whose post as second-in-command will make him more influential, is seen as a centrist.

But Fischer, 70, is also known for a willingness to do what he thinks best, regardless of economic rules or market expectations. As head of Israel’s central bank, he often surprised investors with his interest rate decisions.

“Like Janet Yellen and many others, he is of unquestioned brilliance at knowing when and when not to pay attention to academic concerns or models,” said Adam Posen, president of the Peterson Institute for International Economics.

Some Fed watchers wonder whether there might be tensions between Yellen and the strong-willed Fischer, who will both serve four-year terms, if differences on policy arose.

Laura Tyson, a professor at University of California, Berkeley, who is close to Yellen, downplayed those concerns.

“Janet and Stan have had a close professional relationship over many years,” she said. “They will work terrifically together as a team.”

The author of a widely used textbook on macroeconomics, Fischer has taught many of the leading lights of the profession, including Bernanke and European Central Bank chief Mario Draghi.

As the top deputy at the International Monetary Fund from 1994-2001, he played a key role in battling the Asian financial crisis.

More recently, Fischer, who has both U.S. and Israeli citizenship, was credited with helping Israel safely navigate the shoals of the 2007-2009 financial crisis. He stepped down as governor of the Bank of Israel in June, three years into his second five-year term.

His lengthy experience battling economic crises and his international expertise could be important assets at the Fed.

Brainard, 51, also brings a wealth of international experience.

As undersecretary of the Treasury for international affairs for 3-1/2 years, she was a big player in U.S. efforts to push China toward a more-flexible currency and frequently pressed Europe to tackle its debt crisis more aggressively.

Previously, she had served as deputy director of President Bill Clinton’s National Economic Council, focusing on international trade and financial policy.

Powell, 60, is a domestic finance expert. He served as a top Treasury official under President George H.W. Bush. When he was originally nominated by Obama to the Fed in 2011, the move was seen as a way to mollify Senate Republicans.

WORK AHEAD

The picks would fill out the normally seven-member Fed board, which is the nucleus of U.S. monetary policymaking.

But Obama is likely to have another vacancy to fill soon. Fed Governor Sarah Bloom Raskin is awaiting Senate confirmation to be the No. 2 official at the U.S. Treasury.

Last month, the Fed decided to trim its monthly bond purchase pace to $75 billion from $85 billion, with an eye toward shuttering the program by late in the year.

Yellen has been a strong advocate of the central bank’s aggressive actions to stimulate the economy through low interest rates and large-scale asset purchases.

Even so, economists expect Yellen to continue to wind down the bond-buying program, although a report on Friday that showed unexpectedly weak U.S. job growth in December put a question mark over how quickly the Fed might move.

In tapping Fischer, who taught at the Massachusetts Institute of Technology for many years, Obama has chosen someone whose economic credentials are beyond reproach.

But Fischer’s recent job as chief of a foreign central bank, and his stint in the mid-2000s as vice chairman of Citigroup, which later required a government bailout, could constitute red flags for the senators who need to confirm him.

Fischer was born in present-day Zambia, where his parents, Jewish immigrants from Eastern Europe, ran a general store. When he was 13, his family moved to what is now Zimbabwe. He took an economics course in high school, and was hooked for life.

He went on to study at the London School of Economics and then MIT. At MIT in 1977, he wrote an influential paper arguing that monetary policy can effectively boost employment.


The Jewish Daily Forward welcomes reader comments in order to promote thoughtful discussion on issues of importance to the Jewish community. In the interest of maintaining a civil forum, The Jewish Daily Forwardrequires that all commenters be appropriately respectful toward our writers, other commenters and the subjects of the articles. Vigorous debate and reasoned critique are welcome; name-calling and personal invective are not. While we generally do not seek to edit or actively moderate comments, our spam filter prevents most links and certain key words from being posted and The Jewish Daily Forward reserves the right to remove comments for any reason.





Find us on Facebook!
  • You wouldn't think that a Soviet-Jewish immigrant would find much in common with Gabriel Garcia Marquez. But the famed novelist once helped one man find his first love. http://jd.fo/f3JiS
  • Can you relate?
  • The Forverts' "Bintel Brief" advice column ran for more than 65 years. Now it's getting a second life — as a cartoon.
  • Half of this Hillel's members believe Jesus was the Messiah.
  • Vinyl isn't just for hipsters and hippies. Israeli photographer Eilan Paz documents the most astonishing record collections from around the world:http://jd.fo/g3IyM
  • Could Spider-Man be Jewish? Andrew Garfield thinks so.
  • Most tasteless video ever? A new video shows Jesus Christ dying at Auschwitz.
  • "It’s the smell that hits me first — musty, almost sweet, emanating from the green felt that cradles each piece of silver cutlery in its own place." Only one week left to submit! Tell us the story of your family's Jewish heirloom.
  • Mazel tov to Chelsea Clinton and Marc Mezvinsky!
  • If it's true, it's pretty terrifying news.
  • “My mom went to cook at the White House and all I got was this tiny piece of leftover raspberry ganache."
  • Planning on catching "Fading Gigolo" this weekend? Read our review.
  • A new initiative will spend $300 million a year towards strengthening Israel's relationship with the Diaspora. http://jd.fo/q3Iaj Is this money spent wisely?
  • Lusia Horowitz left pre-state Israel to fight fascism in Spain — and wound up being captured by the Nazis and sent to die at Auschwitz. Share her remarkable story — told in her letters.
  • from-cache

Would you like to receive updates about new stories?




















We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.