Obama picks ex-Bank of Israel head as No. 2 at Fed

Published on NewsOK Modified: January 10, 2014 at 4:09 pm •  Published: January 10, 2014
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WASHINGTON (AP) — President Barack Obama took a step Friday toward reshaping the Federal Reserve under incoming chairman Janet Yellen, choosing a leading expert on the global economy to be her vice chairman.

Obama said he will nominate Stanley Fischer, a former head of the Bank of Israel, for the No. 2 job at the Fed. He would replace Yellen, who was confirmed this week to lead the Fed.

Fischer, a dual citizen of the United States and Israel, was a long-time professor at the Massachusetts Institute of Technology. Departing Fed Chairman Ben Bernanke and Mario Draghi, the current head of the European Central Bank, were among his students.

Obama also is nominating Lael Brainard as a Fed governor. Brainard served as the undersecretary for international affairs at Treasury during Obama's first term. She left the administration recently. He also is renominating Jerome Powell to the Fed for a second term.

All three nominations must be confirmed by the Senate.

"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," Obama said in a statement.

The selections were largely expected and did little to change economists' outlook for Fed policy this year. All three will likely support Yellen's approach to fighting high unemployment as long as inflation stays low. And all three are likely to back plans to gradually withdraw some of that support, if the economy continues to show improvement.

In December, the Fed said it would start reducing its bond purchases from $85 billion a month to $75 billion a month. Further "measured steps" are expected this year. The bond purchases are designed to lower interest rates to spur borrowing and spending.

In selecting Fischer, Obama is tapping someone with extensive experience in global economics. Fischer served as chief economist at the World Bank, deputy managing director of the International Monetary Fund, and head of the Bank of Israel from 2005 until 2013.

During his time at the IMF, Fischer dealt with a number of countries in financial crises. That included the 1997-98 Asian currency crisis, which forced a number of nations to seek support from the IMF to stabilize their currencies and emerge from deep recessions.

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