Israel's Fischer Said to Be Top Candidate for Fed Vice Chairman
Bloomberg News
Former Bank of Israel Governor Stanley Fischer is President Barack Obama's leading candidate to become vice chairman of the Federal Reserve, people familiar with the selection process said.
Fischer, 70, would replace Janet Yellen as the Fed's No. 2 official, according to the people, who asked for anonymity because the decision isn't final. There are no plans by the White House to announce the choice this week, one of the people said.
Another person familiar with the process said that Obama has already offered the job to Fischer, who accepted it. The decision was made jointly by the president and Yellen, who is awaiting Senate confirmation as Fed chairman, the person said.
Fischer, who holds both U.S. and Israeli citizenship, stepped down as a governor of the Bank of Israel on June 30, midway through his second five-year term. He was credited with helping the nation weather the global economic crisis better than most developed countries.
As a professor at Massachusetts Institute of Technology, Fischer oversaw the thesis of future Fed Chairman Ben S. Bernanke, whom Yellen would replace at the helm of the central bank. Fischer also taught European Central Bank President Mario Draghi, and credited him and Bernanke with helping to rescue the world economy. He told an interviewer in London June 13 that future students will study their policies.
Lessons Learned
'I'd like to be able to say all the things they are doing were from what they learned in lectures at MIT, but it wouldn't be true,' Fischer said then. 'From now on when we teach these courses, we'll teach the lessons we've learned from Bernanke and Draghi.'
Former U.S. Treasury Secretary Lawrence Summers and Greg Mankiw, who headed President George W. Bush's Council of Economic Advisers, also studied under Fischer.
Fischer earned a reputation as a trailblazer as the first central banker to cut interest rates in 2008 at the start of the global economic crisis and the first to raise them the following year in response to signs of a financial recovery.
He also bought up foreign currency in unprecedented amounts to drive down the value of the shekel and boost exports, more than doubling reserves.
Interest Rates
Among his innovations at the Bank of Israel was the shifting of responsibility for the monthly interest-rate decision from the governor alone to a six-member Monetary Committee, including three outside academics. He employed a Fed-style dual focus on employment and growth alongside price stability, where previous governors placed an emphasis on inflation.
'It is testament to Stan's skillful handling of Israel's economy that it is one of the very few advanced economies whose output increased every year through the crisis period,' former Bank of England Governor Mervyn King said June 12.
Fischer's resume also includes service at the International Monetary Fund and World Bank, and a stint as vice chairman of New York-based Citigroup Inc.
'There are very few economists out there, if any, that match Fischer's combination of technical knowhow, practical experience, talent, crisis management responder, academic rigor and inter-personal skills,' Mohamed El-Erian, chief executive officer of Newport Beach, California-based Pacific Investment Management Co., said in an interview. El-Erian advised Fischer when both were at the IMF.
Country Switch
Fischer wouldn't be the first central bank governor to change countries. Bank of England Governor Mark Carney was governor of the Bank of Canada from 2008 until last June.
Fischer spent multiple periods at MIT in Cambridge, Massachusetts, where he earned his Ph.D. in economics in 1969, joining the school's faculty as an associate professor in 1973 and becoming an endowed professor in the early 1990s.
He was taught by future Nobel laureate economists Paul Samuelson and Robert Solow.
Jim O'Neill, former chief economist at Goldman Sachs Group Inc., said he regards Fischer as 'one of my heroes' in the profession, along with the late Rudiger Dornbusch of MIT.
'Unlike most of my profession, they can have quite a bit of fun and a joke, and not think that they are the font of all wisdom,' said O'Neill, adding that Fischer 'is also very gracious.'
World Bank
From 1988 to 1990, Fischer was chief economist at the Washington-based World Bank. After returning to teaching at MIT, Fischer joined the IMF as deputy to Managing Director Michel Camdessus in 1994, working to resolve financial crises in Mexico, Russia and Southeast Asia. He left the IMF in 2001 and joined Citigroup as a vice chairman.
Born in 1943 in Zambia, then Northern Rhodesia, Fischer was a member of Habonim, a Zionist youth group, along with Rhoda Keet, his future wife. In the early 1960s, he spent six months on a kibbutz on Israel's Mediterranean coastal plain, where he combined learning Hebrew with manual labor, picking and planting bananas.
In 2005, Fischer accepted Israel's offer to head its central bank, and became an Israeli citizen, one of the job requirements.
To contact the reporters on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net; Phil Mattingly in Washington at pmattingly@bloomberg.net; Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net
To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net; Chris Wellisz at cwellisz@bloomberg.net
Post a Comment for "Israel's Fischer Said to Be Top Candidate for Fed Vice Chairman"