Former head of Israel’s central bank a contender for Federal Reserve post

The White House is leaning toward nominating the former leader of Israel’s central bank to become second-in-command at the Federal Reserve, according to people familiar with the appointment.

Stan Fischer helped Israel successfully navigate the global financial crisis, staving off the type of deep recession and muddled recovery that has plagued the United States and Europe. Fischer stepped down from that post this summer after eight years in the job. He has dual citizenship — U.S. and Israeli.

While Fischer is the leading candidate for the post, one of the people familiar with the nominating process said the decision was not final.

Fischer is considered one of the world’s most eminent economists. In addition to his position at Israel’s central bank, he also has held high-level posts at Citigroup and the International Monetary Fund. As a professor at the University of Chicago and Massachusetts Institute of Technology, he mentored a generation of heavyweights, including former Treasury Secretary Lawrence H. Summers, President George W. Bush’s economic adviser Greg Mankiw and Federal Reserve Chairman Ben S. Bernanke.

“It is hard to praise Stan enough, the mentor, the master and the legend that he is,” IMF economist Ratna Sahay, who has co-authored several papers with Fischer, said during a tribute to him last month.

Fischer has been generally supportive of the Fed’s efforts to pump money into the U.S. economy and keep interest rates low. If appointed, he could bring critical experience to the central bank’s next challenge: managing the tricky process of winding down its unprecedented support for the economy. At the Bank of Israel, Fischer cut interest rates early in the global financial crisis and began raising them in 2009, the first major central bank to do so.

The nomination would fill one of three vacant seats on the Fed’s influential board of governors. The current vice chairman of the Fed is Janet Yellen, who is expected to be confirmed by the Senate for the central bank’s top job before the end of the month. A Senate committee Friday is slated to vote on Fed Governor Sarah Bloom Raskin’s move to the Treasury Department. And Fed Governor Elizabeth Duke stepped down from her position at the end of the summer.

The White House is considering nominating former Treasury Undersecretary Lael Brainardfor one of the empty seats. An administration spokeswoman declined to comment for this story.

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
Scott Wilson is the chief White House correspondent for the Washington Post. Previously, he was the paper’s deputy Assistant Managing Editor/Foreign News after serving as a correspondent in Latin America and in the Middle East.
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