WASHINGTON - President Barack Obama intends to nominate Stanley Fischer, a former head of the Bank of Israel, to be vice chairman of the Federal Reserve, replacing Janet Yellen, who is ascending to the central bank's chairmanship.
Fischer, a dual citizen of the United
States and Israel, is considered a leading expert on monetary policy. He was a
long-time professor at the Massachusetts Institute of Technology. Departing Fed
Chairman Ben Bernanke was one of his students.
Obama also is nominating Lael Brainard
as a Fed governor. Brainard served as the undersecretary for international
affairs at Treasury during Obama's first term. She left the administration
recently. He also is renominating Jerome Powell to the Fed for a second term.
"These three distinguished
individuals have the proven experience, judgment and deep knowledge of the
financial system to serve at the Federal Reserve during this important time for
our economy," Obama said in a statement.
In selecting Fischer, Obama is tapping
someone with extensive experience in global economics to serve on the Fed's
seven-member board. Fischer served as chief economist at the World Bank and
deputy managing director of the International Monetary Fund. He led the Bank of
Israel from 2005 until 2013.
During his time as the No. 2 official
at the IMF from 1994 to 2001, Fischer dealt with a number of countries in
financial crises. The 1997-98 Asian currency crisis forced a number of nations
to seek support packages from the IMF to stabilize their currencies and emerge
from deep recessions.
"He is widely acknowledged as one
of the world's leading and most experienced economic policy minds, and I'm
grateful he has agreed to take on this new role, and I am confident that he and
Janet Yellen will make a great team," Obama said.
Obama praised Brainard as "one of
my top and most trusted international economic advisers during a challenging
time not just at home, but for our global economy as well."
Economists said they did not expect
Fischer, 70, to dissent from the activist approach to Fed policy that Bernanke
and Yellen have supported. That effort has kept interest rates low in an effort
to stimulate growth and fight high unemployment in the wake of the 2007-09
Critics of this approach have worried
that the central bank's low interest rate policies, including massive purchases
of Treasury bonds and mortgage-backed securities, could be setting the stage
for future economic problems. The concern is that the prolonged period of low
interest rates could trigger unwanted inflation down the road and also
threatens to build up bubbles in assets such as stock which could destabilize
David Jones, chief economist at DMJ
Advisors and the author of several books on the Fed, said that Fischer had an
excellent reputation in the field of monetary policy and would bring expertise
in global economics.
"The White House has reached out
to someone who has a wealth of not only theoretical experience but practical
experience in monetary policy," Jones said.
In addition to serving as Bernanke's
faculty adviser when he was writing his doctoral thesis at MIT, Fischer also
taught Mario Draghi, the current head of the European Central Bank. He also
wrote or co-authored a number of influential college economics textbooks.
Sung Won Sohn, an economics professor
at the Martin Smith School of Business at California State University, said
that Fischer's selection to be a top official at the U.S. central bank after he
had headed Israel's central bank followed a pattern set recently by Britain.
That country tapped Mark Carney, who had been head of the Bank of Canada, to
take over this year as the new head of the Bank of England.
"I think we are going to see more
and more such moves," Sohn said. "Because of globalization, the world
economy is now very interconnected."
During his time as head of Israel's
central bank, Fischer earned praise for his handling of Israel's economy in the
aftermath of the 2008 financial crisis.
After leaving the IMF in 2001, Fischer worked from February 2002 to April 2005 at U.S. banking giant Citigroup, holding various positions including president of Citigroup International.