Israel Central Bank Follows Fed With First Woman Chairman Appointment After Larry Summers' Rejection

Ten days ago, when we reported on the latest rumors surrounding the fiasco that the Israeli central bank governor selection process has become (nearly as farcical as the bungled choice of Yellen in the US), we joking wondered:

Overnight, we once again learned that in the New Normal the thin line between reality and rhetorical absurdity is perhaps too thin, following a report in The Hill that, as we joking suggested, it was indeed Larry Summers who the Bank of Israel had turned to in its quest for governor. From The Hill:

Former Treasury Secretary Larry Summers, who was in the running to succeed Ben Bernanke as chairman of the Federal Reserve, reportedly turned down an offer to lead the Bank of Israel.


Israel’s Channel 2 reported on Friday that the former Harvard president was one of multiple non-Israelis approached by Prime Minister Benjamin Netanyahu to succeed Stanley Fischer, who left the post in June after a term that began in 2005.

As a reminder, the Bank of Israel governor selection process has become an even greater fiasco than the choice of Mr. Mrs. Yellen as head of the Fed, after it was none other than JPMorgan Chase International Chairman Jacob Frenkel who was slated to become the new governor when his candidacy went up in a puff of kosher smoke following the release of details involving Frenkel and a shoplifting scandal at a Hong Kong airport duty free store. Guess JPM doesn’t pay that well after all.

But back to Larry Summers and the Bank of Israel, which moments ago announced that it has concluded its 112-day process in which it had gone without a central bank chief, and had appointed Karnit Flug as its new governor. In taking a page from the Fed’s own selection process, Flug is also the first woman to be appointed as head of the Bank of Israel. From Reuters:

Israel on Sunday named Karnit Flug as the new governor of its central bank, the first woman to be appointed to the office, after a rocky selection process that dragged on for months.


Flug, 58, served as deputy to previous governor Stanley Fischer, who stepped down in June after eight years on the job, and has been the Bank of Israel’s acting chief since he left.


Accepting the post, Flug said in a statement the central bank and Israel’s economy faced significant challenges.


Announcement of Flug’s appointment followed a meeting between Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid, who had been unable since Fischer resigned to fill the post.

Ironically, just as Yellen was nowhere near Obama’s top choice for the new Fed chairman, Flug was not Prime Minister’s Netanyahu primary choice.

Fischer had recommended Flug to replace him, but Netanyahu, officials said, had preferred candidates with a stronger international standing.


Netanyahu and Lapid initially chose Jacob Frenkel, central bank governor in the 1990s and currently chairman of JPMorgan Chase International, to succeed Fischer, but he pulled out following reports he had been arrested on suspicion of shoplifting at Hong Kong’s airport in 2006. Frenkel denied any wrongdoing, and authorities in Hong Kong decided not to pursue the case.


A second candidate, Bank Hapoalim Chief Economist Leo Leiderman, also dropped his bid two days after his nomination, citing personal reasons.


Netanyahu and Lapid said in a statement: “We were impressed by Dr. Flug’s performance over the past months as head of the Bank of Israel and we are confident she will continue to help us lead Israel’s economy to further achievements in the face of the world economic upheaval.”

Below is Flug’s full background from the BOI website:

Dr. Karnit Flug has been the Deputy Governor of the Bank of Israel since July 2011. She was appointed as Deputy Governor by the Israeli Government, in accordance with the Bank of Israel Law, 5770-2010 and with the recommendation of the Governor of the Bank of Israel.


Dr. Flug completed her M.A (cum laude) at the Hebrew University in 1980 and her Ph.D. in Economics at Columbia University in 1985.


In 1984, Dr. Flug joined the IMF as an economist. In 1988, she returned to Israel and joined the Research Department of the Bank of Israel, where she worked and published papers on topics related to the labor market, balance of payments and macroeconomic policies.


In 1994-1996, while on leave from the BOI, Dr. Flug worked at the Inter-American Development Bank as a senior research economist. In 1997, upon return to the BOI she was appointed Assistant Director of the Research Department and in June 2001 she was appointed Director of the Research Department and a member of the BOI’s senior management.


Dr. Flug has served on a number of public committees, including the committee on a multi-year defense budget (the “Brodet” committee); the committee aimed at ensuring the long term financial stability of the National Insurance Institute; the committee aimed at enhancing competition within the Israeli markets; the committee for social and economic change (the “Trajtenberg” committee), and several others.

Her response to learning that, just like Yellen, not quite top choice is still “good enough”:

Dr. Karnit Flug thanks the Prime Minister and the Minister of Finance on her expected appointment as Governor of the Bank of Israel.


Dr. Flug adds that the Bank of Israel and the Israeli economy face significant challenges, and that she looks forward to working in full cooperation with the professional and dedicated staff of the Bank of Israel, as well as with government officials, in order to meet these challenges.

We too were shocked to find no mention of the phrase “Goldman Sachs” in the bio above. As for Larry Summers, we can only imagine to what depths of misogynistic hell his ego must have tumbled after women ended up overtaking him as heads of not one but the two central banks he was slated to head within a month.


via Zero Hedge Tyler Durden

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