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Stanley Fischer / Getty
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President Obama today announced the nomination of two new individuals to serve on the Board of Governors of the Federal Reserve System – or the US Central Bank as it is more colloquially known.
The President announced his intent to nominate Stanley Fischer to serve as Vice Chairman and Governor, and Lael Brainard to serve as Governor. In addition he announced his intent to nominate Jerome Powell, who already sits on the Board but whose term is expiring, for a second term.
This is the final piece of the story that developed a few days ago when President Obama’s nominee to become the Chairman of the Federal Reserve, Janet Yellen, was confirmed by the US Senate. She will take up office at the end of January on the retirement of Ben Bernanke at the expiry of his second term.
Stanley Fischer will then replace Yellen, who is the incumbent Vice Chairman of the Fed. His nomination had been rumoured for quite some time but is only now being confirmed. He gave up his post as Governor of the Bank of Israel at the end of June 2013, with considerable expectation even then that something like this could be in the cards.
In commenting on the nominations President Obama said, “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.”
And Presdient Obama then said of Stanley Fischer as follows, “Stanley Fischer brings decades of leadership and expertise from various roles, including serving at the International Monetary Fund and the Bank of Israel. 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”.
Lael Brainard until November worked at the Treasury department where she was Undersecretary of the Treasury for International Affairs.
Stanley Fischer’s credentials for his new job are of course impeccable, and are worth re-capping here even though many readers may be familiar with them already:
He served as the Governor of the Bank of Israel from 2005 to 2013, where he successfully navigated Israel’s economy through the global financial crisis. Prior to joining the Bank of Israel, he was Vice Chairman of Citigroup from 2002 through 2005. From 1994 to 2001, he was the First Deputy Managing Director of the International Monetary Fund (IMF), addressing the Asian, Russian, Brazilian, and other financial crises of the late 1990s. Before he joined the IMF, Dr. Fischer was the Killian Professor and Head of the Department of Economics at the Massachusetts Institute of Technology (MIT). From 1988 to 1990, he was Vice President, Development Economics and Chief Economist at the World Bank. From 1973 to 1994, he taught economics at MIT. Dr. Fischer was Assistant Professor in the Department of Economics at the University of Chicago. He received a B.Sc. and an M.Sc. from the London School of Economics and a Ph.D. from MIT.
Wow (!) indeed.
Stanley Fischer is 70 years old, is a citizen of both the United States and Israel and he lives in New York. While Governor of the Bank of Israel he was widely praised for helping the Israeli economy maintain continued economic growth all through the global economic crisis, and indeed to perform much better than most other countries.
President Obama’s new nominees, including Dr. Fischer’s, are now subject to confirmation by the US Senate, which could take some time given the fractious nature of political relationships between that body and the Executive branch of the US Government at the present time.
Like both Janet Yellen herself, who will now be his new boss, and the retiring Ben Bernanke as well, Fischer represents the modern-day school of Keynesian economics. As such it has a playbook for dealing with prolonged recession and the concept of a “liquidity trap”. This has become very relevant in current economic conditions which have combined, at least until recently in the US, depressed levels of final demand, virtually zero inflation and high levels of unemployment all at the same time.
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