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Professor Jacob (Yaacov) Frenkel does a sudden but not unexpected about turn on returning as governor of the Bank of Israel.

A visibly upset Professor Franklin confirmed to reporters during a live interview on Israeli TV confirmed that he has informed Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid of his decision not to take up the post in light of considerable public pressure relating to allegations of his honesty.

SX036_281B_9 Jacob Frenkel BLOOMBERG 10

 

/ By Gali Raz/

A few eyebrows were raised when Prime Minister Benjamin Netanyahu announced that Professor Frenkel would be making a comeback to the role that he had held as governor of the Bank of Israel between 1991 and 2000. During his two consecutive terms, Frenkel is recognized as having made considerable strides in reducing inflation in the country, taken some steps in liberalizing Israel’s financial markets and most importantly removing problematic foreign exchange controls.

Many people were surprised that he was prepared to accept the role, as to begin with he would be stepping into the considerable vacuum created by the Professor Stanley Fischer who stepped down at the end of June after four years in the post.

Professor Fischer not only did a very successful job in what has to be one of the most uncomfortable positions in the Israeli public sector, but he also succeeded in making himself an increasingly popular figure across a very broad section of the Israeli public. This popularity was due to his friendly and un-patronizing manner and his genuine desire to speak to the public at large, due to his uncanny ability to learn Ivrit in a commendably short period of time.

Frankel, on the other hand, was never such a popular figure, either in the banking world, in his dealings with the Israeli government and being regarded as having a distinctly aloof manner towards the Israeli public.

It was not long before stories began to leak about accusations of shoplifting at a duty free store at Hong Kong airport that Frankel claims to have been a “misunderstanding”

Misunderstanding or not, the implications were there and immediately refreshed the media’s memories regarding the State Comptroller’s order to Frankel to return expenses during his first tenure at the Bank of Israel. Like a snowball on a cold winter’s day the story began to roll upwards and onwards, sufficient to raise doubts whether the Turkel Committee would even approve his appointment.

So now Frankel has let Netanyahu off the hook by giving up on the job while attempting to save some public face, before it is too late. Chances are he will find himself back in the United States on Wall Street while Netanyahu will be scratching his head trying to think of who the next governor of the Bank of Israel might be. With a new addendum to the  job description – must have an exceptionally thick skin.

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