Stanley Fischer appointed to assist Janet Yellen
In a bold move, President Obama has tapped the Southern African born and bred Stanley Fischer to be Yellen’s deputy. Fisher, who now holds joint Israeli/US citizenship, successfully guided the Israeli economy right past the world’s recent recession.
Fischer (pictured at right) is widely acclaimed and, while at MIT, taught the likes of the outgoing Fed chief’s Ben Bernanke.
Bernanke, as a student at MIT in in the 70’s, thanked Fischer in his doctoral thesis for his advice.
The Israeli central banker also taught Mark Carney, Canada’s Minister of Finance recently appointed Chancellor of the Exchequer in the UK. Carney said yesterday that Fischer whould bring “an immense source” of wisdom to the US Fed.
President of the European Central Bank, Mario Draghi, is also a past student of Fischer’s, as was former US Treasury Secretary Larry Summers.
Yellen has what it takes
When she succeeds Ben Bernanke, whose second four-year term as Fed chairman expires on 31 January, Ms Yellen will become one of a handful of women heading central banks globally. She is currently the Fed’s vice chair and is by no means in need of guidance. But having Fischer at her side must be a great comforter.
The vote to approve her was 56-26. Ms Yellen won resounding support from Democrats, but many Republicans voted against her appointment.
The Fed cut overnight interest rates to near zero in late 2008 and has quadrupled its balance sheet to more than $4 trillion through a series of massive bond purchase programmes meant to push down longer-term borrowing costs.
Ms Yellen, 67, spent years defending those efforts, arguing both as Mr Bernanke’s deputy and before that as head of the San Francisco Federal Reserve Bank that they would reduce borrowing costs and spur hiring and economic growth.
Bloomberg News reported last week that Fischer has been offered the job and has accepted even before congress had confirmed Yellen’s appointment. But the White House only made the announcement after Yellen’s confirmation.
The surprising development has led to chatter about a “dream team” – says Bloomberg’s – but this may be premature: The idea is not without risk.
“No disrespect to Yellen,” says Bloombergs, “whose credentials are outstanding, but Fischer is probably the most qualified person in the world to be Fed chairman. He’s an academic economist of the top rank and a renowned teacher of the discipline.”
“His policy experience is equally impressive: He had top jobs at the World Bank and the International Monetary Fund before heading to Wall Street for a short spell at Citigroup Inc. From there he moved to the Bank of Israel, where his record was conspicuously good. Israel weathered the global crash better than most. At the start of the financial crisis in 2008, Fischer was the first central-bank chief to cut interest rates – and the first to raise them as the recovery got going,” they say.
Who is Stanley Fischer?
WIKIPEDIA says Fischer was born into a Jewish family in Mazabuka, Northern Rhodesia (now Zambia). When he was 13, his family moved to Southern Rhodesia (now Zimbabwe), where he became active in the Habonim Zionist youth movement. In 1960, he visited Israel as part of a winter program for youth leaders, and studied Hebrew at kibbutz Ma’agan Michael.
RIGHT: Fischer with his ex-pupil & new boss’s pre-decessor Bernanke
He had originally planned to study at the Hebrew University of Jerusalem, but went to the United Kingdom to study after receiving a scholarship from the London School of Economics, and obtained his B.Sc. and M.Sc. in economics from 1962–1966. Fischer then moved to the United States to study at MIT, and earned a Ph.D. in economics in 1969. In the early 1970s, Fischer worked as an associate professor at the University of Chicago. He became an American citizen in 1976.
Fischer is married to Rhoda Fischer (née Keet), who had met during his days in Habonim. The couple have three children. When they moved to Israel, Rhoda became honorary president of Aleh Negev, a rehabilitation village for the disabled.
ACADEMIC CAREER: Fischer served as a professor at the MIT Department of Economics from 1977 to 1988, where he authored three popular economics textbooks. In 2012 Fischer served as Humanitas Visiting Professor in Economic Thought at Oxford.
BANKING CAREER: From January 1988 to August 1990 he was Vice President, Development Economics and Chief Economist at the World Bank. He then became the First Deputy Managing Director of the International Monetary Fund (IMF), from September 1994 until the end of August 2001. By the end of 2001, Fischer had joined the influential Washington-based financial advisory body, the Group of Thirty. After leaving the IMF, he served as Vice Chairman of Citigroup, President of Citigroup International, and Head of the Public Sector Client Group. Fischer worked at Citigroup from February, 2002 to April, 2005.
CENTRAL BANKS: Bank of Israel – Fischer was appointed Governor of the Bank of Israel in January 2005 by the Israeli cabinet, after being recommended by Prime Minister Ariel Sharon and Finance Minister Benjamin Netanyahu. He took the position on 1 May 2005. Fischer became an Israeli citizen but did not have to renounce his American citizenship, despite previous concerns that such a step was a prerequisite for the appointment.
He had been involved in the past with the Bank of Israel, having served as an American government adviser to Israel’s economic stabilization program in 1985. On 2 May 2010, Fischer was sworn in for a second term. Under his management, in 2010, the Bank of Israel was ranked first among central banks for its efficient functioning, according to IMD’s World Competitiveness Yearbook.
Fischer has earned plaudits across the board for his handling of the Israeli economy in the aftermath of the global financial crisis. In September 2009, the Bank of Israel was the first bank in the developed world to raise its interest rates. In 2009, 2010, 2011 and 2012 Fischer received an “A” rating on the Central Banker Report Card published by Global Finance magazine.
In June 2011, Fischer applied for the post of IMF managing director to replace Dominique Strauss-Kahn, but was barred as the IMF stipulates that a new managing director must be no older than 65, and he was 67 at the time.
“There has been some discussion that his nationality may have influenced this decision,” says Wikipedia.
Who is Janet Yellen?
WIKIPEDIA says that Janet Yellen was born to a Jewish family in Brooklyn, New York, the daughter of Anna (née Blumenthal) and Julius Yellen, a physician. She graduated summa cum laude from Pembroke College (Brown University) with a degree in economics in 1967, and received her Ph.D. in economics from Yale in 1971 for a thesis titled Employment, output and capital accumulation in an open economy: a disequilibrium approach under the supervision of James Tobin and Joseph Stiglitz.
Yellen is married to George Akerlof, a Nobel prize-winning economist and professor emeritus at the University of California, Berkeley.
Her son, Robert Akerlof, teaches Economics at the University of Warwick.
CAREER: Yellen was an assistant professor at Harvard in 1971–76 and an economist with the Federal Reserve Board of Governors in 1977–78. Beginning in 1980, Yellen has been conducting research at the Haas School and teaching macroeconomics to full-time and part-time MBA and undergraduate students.
She is now a Professor Emerita at the University of California, Berkeley’s Haas School of Business, where she was named Professor of Business and Professor of Economics. She has been awarded the Haas School’s outstanding teaching award twice.
Yellen served as chair of President Bill Clinton’s Council of Economic Advisers from February 1997[ to 1999, and was appointed as a member of the Federal Reserve System’s Board of Governors from 1994 to 1997. She has taught at Harvard University and at the London School of Economics. Yellen serves as president of the Western Economic Association International and is a former vice president of the American Economic Association. She was a fellow of the Yale Corporation.
From June 2004 to 2010, Yellen was the President and Chief Executive Officer of the Federal Reserve Bank of San Francisco. She was a voting member of the Federal Open Market Committee (FOMC) in 2009.
In a 2005 speech in San Francisco, Yellen argued against deflating the housing bubble because “arguments against trying to deflate a bubble outweigh those in favor of it” and predicted that the housing bubble “could be large enough to feel like a good-sized bump in the road, but the economy would likely be able to absorb the shock.” In 2010, Yellen told the Financial Crisis Inquiry Commission that she and other San Francisco Fed officials looked for guidance from Washington because “she had not explored the San Francisco Fed’s ability to act unilaterally,” according to the New York Times.
In July 2009, Yellen was mentioned as a potential successor to Ben Bernanke as chair of the Federal Reserve System, before he was re-nominated by Barack Obama.
On 9 October 2013, Barack Obama nominated her as the first woman chair of the Federal Reserve, saying, “She had sounded the alarm bell early about the housing market bubble and excesses in the financial markets before the recession. She calls it like she sees it.”