Jacob Frenkel 370.
(photo credit: Wikimedia Commons)
Economic analysts and market-watchers praised Prime Minister Binyamin Netanyahu
and Finance Minister Yair Lapid’s choice of Jacob Frenkel to return as Bank of
Eldad Tamir, CEO of Tamir Investments, said bringing an
old hand back into the role will make up for Lapid’s inexperience, and that the
choice was right on (“Bingo!”).
Elise Brezis, head of the Aharon Meir
Center for Banking and former BOI adviser, agreed.
“At a time when our
finance minister is a beginner, it’s a great choice,” she said. The fact that
Frenkel had liberalized Israel’s financial markets and showed ability to make
bold decisions made the choice “good news for the Israeli economy.”
she spotted a downside in his appointment as well – one which will not sit well
with Israel’s social protest movement.
“The only negative point that can
be brought against him is that the salaries of top players in the financial
system and the inequality in Israel are not the kinds of things that will stand
on his agenda,” she said.
Frenkel’s undertakings since his last stint at
the bank may also come back to haunt him. Frenkel was the vice chairman of AIG
International during the financial crisis, when the insurance giant nearly
collapsed, only to be saved by a massive bailout from the US Treasury because it
was “too big to fail.”
Frenkel tried to distance himself from the
company, which he left in 2009, insinuating that his role there was merely
“The stain of him being an executive at AIG during its
collapse is expected to come up again and again,” notes Pioneer Financial
Planning’s Shmuel Ben- Arieh. But Ben-Arieh nonetheless surmises that “investors
are likely to welcome the appointment of someone that has worked with the prime
minister in the past, and considered to have contributed greatly to building the
Globes also brought to light an old State Comptroller’s
Report that required Frenkel to refund the government NIS 238,000 after
examining benefits he had received.
“Frenkel, with the help of a senior
manager who was subordinate to him, arranged ‘special financial arrangements’ –
in effect a large and possibly illegal financial package,” the newspaper
“Frenkel found a way to benefit from every possible linkage:
salary terms and expenses linked to ministers, academic rights linked to
university professors, and extraordinary salary terms that Bank of Israel
executives receive in any case.
The result was hundreds of thousands of
shekels in additional money that Frenkel took from the public’s
The miniature scandals have the most potential to weigh Frenkel
down before his confirmation. Though they should provide excellent ammunition
for the opposition, once he is approved as governor there is little reason to
think it will affect his performance in the position.
“It will be
interesting to see with what policy steps Frenkel will take on the challenges
facing Israel’s economy – the housing bubble, the economic slowdown, the
appreciation of the shekel – and if he’ll continue down Fischer’s line,” trading
company FXCM wrote in response to the nomination. “Nonetheless, despite the
market’s familiarity with Frenkel, investors will wait until his first public
statement and first policy meeting as governor to examine his current stance and
his cooperation with Netanyahu and Lapid.”