Policy: Economy

Former Bank of Israel head Stanley Fischer rumored for Federal Reserve vice chair

By |
PennAve,Joseph Lawler,Economy,Federal Reserve

Former Bank of Israel governor Stanley Fischer is President Obama's top choice for vice chairman of the Federal Reserve, according to numerous reports.

It was first reported on Israeli television Wednesday afternoon that the White House favored the 70-year-old dual citizen of the U.S. and Israel for the job, and subsequently reported by several American outlets.

The current Fed vice chairman, Janet Yellen, is Obama's nominee to become chairman when current Chairman Ben Bernanke's term expires in January.

Fischer is known as one of the top macroeconomists in the world, having been the thesis adviser to Bernanke and European Central Bank President Mario Draghi as a professor at the Massachusetts Institute of Technology. He worked as a top official at the International Monetary Fund and at Citigroup before taking over as the head of Israel's central bank in 2005 and remaining in that office until earlier this year.

Fischer is thought to share many views of monetary policy with his former protege Bernanke. But there could be one major point of difference between Bernanke and Yellen and Fischer. Earlier this year, Fischer expressed doubt about one of the main tools that the Fed has relied on to try to stimulate the economy, namely forward guidance regarding interest rates.

Under the leadership of Bernanke and Yellen, the central bank has said that it will keep short-term interest rates near zero at least until unemployment is below 6.5 percent. But Fischer questioned at a conference in Hong Kong whether the Fed can credibly commit to such an approach, saying, "You can't expect the Fed to spell out what it's going to do.Why? Because it doesn't know.”

If Fischer is nominated to the Fed, that would leave three positions on the Board of Governors to be filled. One governor, Elizabeth Duke, left earlier in the year. Another, Sarah Bloom Raskin, has been nominated for a post in Obama's Treasury Department. Jerome Powell's appointment expires in January, but he is expected to be renominated.

The 2010 Dodd-Frank financial reform law mandates that the president select a second vice chairman to oversee supervision of the banking industry. The president has yet to nominate a candidate for that position.

View article comments Leave a comment