Fischer may head NY Federal Reserve

Bank of Israel chief listed by 'Wall Street Journal' as possible replacement for Timothy Geithner.

Stn Fischer good 88 248 (photo credit: Ariel Jerozolimski)
Stn Fischer good 88 248
(photo credit: Ariel Jerozolimski)
Bank of Israel Governor Stanley Fischer may be a dark-horse candidate for the presidency of the Federal Reserve Bank of New York. The Wall Street Journal on Tuesday included Fischer - a former MIT professor who supervised US Federal Reserve chief Ben Bernanke's doctoral thesis - on its short list of prospects to replace Timothy Geithner. Geithner, who was named Treasury secretary last week by President-elect Barack Obama, is expected to leave his post in "the next several weeks," according to a statement from the New York Fed. Fischer, 65, a former deputy managing director at the International Monetary Fund and chief economist at the World Bank, also worked as a senior executive at Citigroup prior to his appointment to Israel's central bank in 2005. When asked in a recent interview with The Jerusalem Post if he would consider leaving his post to either return to the private sector or to a higher-profile public position amid the unfolding financial crisis, Fischer said: "One of the great things I have learned about life is that you don't have to make decisions before you have to make them." The Bank of Israel declined to comment on the matter Tuesday. Some economists expressed concern for the economy if Fischer were to cut short his term, particularly with February's elections on the horizon. "If Fischer decides to leave before a new government is formed, which could also involve a new finance minister, it would leave the Israeli economy in a difficult position," said Shlomo Maoz, chief economist at Excellence Nessuah Investment House in Tel Aviv. Other economists questioned whether Fischer, who became an Israeli citizen in order to take up his current post, would in fact be interested in trading places now. Fischer said in an October interview with Fox News that he was focused on acting to counter the financial crisis as it spread to emerging markets and developing countries beyond the US and Europe. He reassured reporters in Jerusalem on Monday that Israel's economy was fundamentally "in good condition" to weather the global economic storm. The New York branch of the Federal Reserve Bank plays a key role in US financial markets and is responsible for extending government credit to banks as well as trading US securities on behalf of the US Treasury. Its president also holds a permanent seat on the US interest-rate setting body. The New York Fed's search committee will be made up of Stephen Friedman, chairman of both the bank's board of directors and Stone Point Capital, and fellow New York Fed directors Charles Wait, president and CEO of The Adirondack Trust Co., and Denis Hughes, president of the New York State AFL-CIO. Others mentioned as possible successors to Geithner include New York Fed executive William Dudley, who oversees the Federal Reserve's market operations, and Kevin Warsh, a governor at the Federal Reserve Board in Washington, DC. AP contributed to this report.