Stanley Fischer. His prestige and heritage behoove him to cast light on the shadows
Photo: Gil Yohanan

Fischer, Bank Leumi and the shadows

Bank of Israel governor can dispel shroud of uncertainty surrounding his true intentions by announcing he has no plans to meddle in nomination of Leumi's new chief

Alan Greenspan was the God of America's economy for no less than 18 years. He stepped down from his chair at the Fed in 2006. Debates on the extent to which he played a role in the global crises began only after the financial calamity began wreaking havoc in every corner of the globe. By then of course, it was too late.


The economic pundit came to mind this week as Calcalist blew the cover off Prime Minister Benjamin Netanyahu's designs to move Stanley Fischer from his chambers at the Bank of Israel to the President's Residence. As expected, Fischer modestly downplayed the entire affair and offered a non-denial denial.


Calcalist's exposure triggered objections to the notion that the president would be a candidate who has lived most of his life in the United States and had been living in Israel for only several years.


Objections aside, there is not even the slightest dispute over Fischer's contribution to Israel's economy. Commentators are stampeding to lavish compliments on the Governor; Politicians bow before him and even the trembling tycoons are compelled to sing his praises.


Stanley Fischer is the God of Israel's economy. No one listens to the occasional iconoclasts. The thought that we're in the trusted hands of a "responsible adult" is just too appealing and comforting.


Evaluating the performance of an incumbent bank governor is easier said than done. It may be true that Fischer is one of the world's best central bank governors and perhaps the accolades are well deserved. There is no doubt that he is a wise and experienced economist who is held in the highest regard and is well connected.


Yet the discourse on Fischer's fiscal policies are unbearably scant and do little in the way of contributing to Israel's economy, which is why I tried to call together a panel of leading economics to discuss the Bank of Israel under Fischer's reign.


My invitation was met with a chorus of guffaws. After all, who in their right mind would partake in a critical debate on Stanley Fischer – his subordinate bankers? Or perhaps the ranks of the academia who so very much seek to curry favor with the governor?


Occasionally, a handful of lionhearted economists take a swipe at Fischer. International hedge fund advisor Avi Tiomkin even cried out that the emperor has no clothes. He argued that Fischer's foreign and local currency policies, his effect on the teetering real estate market and, in particular, his forecasting abilities were all a total flop.


"Forecasts published by Fischer's Bank of Israel proved to be disgracefully inconsistent," he wrote last week in Globes financial daily. No one uttered a sound – neither to punch a hole in his allegations nor to second his opinion. An oppressive silence.


Fischer's forecasting prowess was slightly dented in June 2011, when he decided to submit his candidacy for the position of IMF chief, despite the organization's standards limiting applicant's age to 65.


It was rather interesting to see how Israeli experts attributed savoir-faire to Fischer, not doubting for a second that if chances were slim of his nomination, he would never have applied in the first place.


Embarrassingly enough though. only days after joining the race, 67-year-old Fischer was disqualified because of those petty rules. No know-how nor promise. Yet somehow, the scathing defeat did not dent the natives' adulation of their Governor and in no time flat he was once again adorned with well-publicized praise.


Responding to open criticism

Fischer's "PR reps" endeavor to portray him as an uncompromisingly impartial professional – the complete opposite of your run-of-the-mill politician. Ministers and Knesset members who have experienced "Fischerism" first hand, say he can teach the minister of finance and the boys at the Treasury a lesson or two in the workings of local politics.


How interesting that more than a few bankers and regulators – and even a number of journalists who have been affronted by Fischer's occasional wrath – share this opinion, albeit behind closed doors.


"He is more hard-ball than Lieberman and hungrier for fame than Peres," testifies a senior official in the capital. Well, perhaps it's inevitable after all these years of flattery and fear.


One can learn a thing or two about the man just by observing how he responds to open criticism, as rare as it may be. Earlier this week, during a public appearance at the Tel Aviv University, several students dared to interrupt the guest speaker and loudly interjected that his low interest rate policies were "inflating the real estate bubble and robbing the young generation of its future."


Fischer immediately put on an amused smile and with the demeanor of an anthropologist who had just stumbled upon a native tribe explained that the low interest rate is actually for their own benefit.


He took the opportunity to comment on Bank Leumi's quest for a new director in place of outgoing Galia Maor, stressing how important it was that the central bank ensures the stability of the major commercial banks; some viewed these remarks as a well-aimed reminder of who in fact is in charge.


As Maor's retirement approaches, it seems only natural that the Governor will take an interest in her replacement; however, hushed murmurs within the corridors of power and banks claim that the Governor's interest stems from more than just a healthy dose of curiosity.


The Bank of Israel spokesman reassuringly promised that the Governor has no intention to meddle in the nomination process. Believe it if you wish. The Governor has already demonstrated his uncanny ability to remain in the dark when it comes to knowing what his staff members are up to under the radar – he is a notch above the rest and below that – the shadows are doing their job.


Bank Leumi's board, chaired by David Brodet, has one of the economy's most impressive roasters of directors, who have gained years of experience in banking, management, business, economic theory, law and regulation.


It's reasonable to believe that such a formidable group of professionals would not allow the nomination proceedings to be contaminated by shadows of sorts. Some of them even maintain that the shadows operate independently, without the governor's seal of approval, to promote their own interests. Perhaps this is so; it surely wouldn't be the first time the tail wags the dog.


But Fischer can dispel the shroud of uncertainty surrounding his true intentions simply by announcing that he has no intention of meddling in the nomination of Bank Leumi's new chief and that anyone claiming to act on his behalf or speak in his name is no more than a fraud.


His prestige and heritage behoove him to cast light on the shadows.


Click here to read this op-ed in Hebrew



פרסום ראשון: 01.26.12, 07:34
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