2nd choice for Bank of Israel chief withdraws, ridiculed for interest in astrology

Leo Leiderman had indicated Wednesday he would take the job, after Jacob Frenkel backed away; then came reports of his ‘hobby’

Leo Leiderman (photo credit: YouTube screen capture)
Leo Leiderman (photo credit: YouTube screen capture)

In a new blow for Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid as they tackle Israel’s financial challenges, Bank Hapoalim economist Leo Leiderman, who was named Wednesday as the next Governor of the Bank of Israel, withdrew his candidacy on Friday.

Leiderman was chosen to succeed the well-regarded Stanley Fischer in the post, two days after Jacob Frenkel notified Netanyahu and Lapid Tuesday that he would not be taking over from Fischer as originally intended. Fischer stepped down over a month ago. His acting replacement Karmit Flug resigned on Wednesday when she was passed over for the post.

Leiderman informed Netanyahu and Lapid Friday that he wished to withdraw his candidacy, which was about to be vetted by an appointments panel, having discussed the matter with family members and decided he preferred to continue working in the private sector. He had previously indicated he would take the job, and the turnaround was likely at least a partial consequence of media ridicule over his interest in astrology.

Netanyahu promptly issued a statement expressing his and Lapid’s “regret” at Leiderman’s decision.

On Thursday, Channel 10 reported that Leiderman had consulted regularly with an astrologer, Amos Aharoni, on various matters — a pursuit that caused much merriment in the media. Friday’s Yedioth Ahronoth carried a mocking headline about Leiderman asking how the economy was doing on planet Neptune.

Leiderman said none of his consultations with Aharoni related to professional or financial issues, and that the sessions were nothing more than a “hobby.”

However, an unnamed source told Channel 10 that Leiderman would contact the astrologer “often, at times very often.” He said Aharoni’s advice to Leiderman was based on information such as the client’s date of birth. The news report said the consultations continued during the years when Leiderman held very senior economic positions, that he sometimes spoke with the astrologer “several times a day,” and even took him with him to various events. The report said economists “raised their eyebrows” at news of the unusual combination of “astrology and numerology.”

Leiderman, a longtime professor at Tel Aviv University, currently serves as the chief economist of Bank Hapoalim, and previously headed the Bank of Israel Research Department. He also served as director and head of the emerging markets economic division at Deutsche Bank in New York and London.

“This is a very emotional day,” he said Wednesday night to reporters at his home, hours after he had been named for the job, declining further comment except to say, “We’ll have lots of opportunities to speak in the future.”

Netanyahu and Lapid came to a decision over the appointment following an afternoon of intensive discussions in which they determined that Leiderman would at this point be the most suitable candidate for the prestigious post, the Prime Minister’s Office said. The appointment would still have been subject to approval by the Appointments Advisory Committee headed by retired Supreme Court Justice Jacob Turkel.

“I thank Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid for their trust in me,” Leiderman said following the announcement. “I’m excited to return to the Bank of Israel, and will work to help Israel’s economy overcome the challenges we face.”

Leiderman was born in Argentina and immigrated to Israel at the age of 17. He earned his BA in Economics at the Hebrew University and completed his Masters as well as his PHD at the University of Chicago. His doctoral thesis on macro-economics was written under the guidance of Nobel Laureate Professor Robert Lucas.

Flug, who currently serves as acting governor of the Bank of Israel, had welcomed Leiderman’s appointment and wished him a successful term. However Flug, who also sought the job, also said that after assisting Leiderman’s transition to the Bank of Israel, she plans on leaving the bank after 25 years of employment at the institution. She had reportedly been Fischer’s favored successor.

The Bank of Israel governor’s post is now again vacant as Israel is entering a period of austerity measures meant to slake a deep budget deficit and amid fears that the financial downturn in Europe could also play havoc with Israel’s economy.

Leiderman has spent much of his career researching the impacts of inflation, economic stabilization policy, central bank policy and emerging market economies.

Leiderman’s short-lived appointment was necessitated after Frenkel withdrew his candidacy amid a scandal over alleged attempted shoplifting in a Hong Kong airport duty free store several years ago.

Frenkel said the shoplifting claim arose after a misunderstanding, and bitterly withdrew his candidacy Monday complaining over a media campaign of vilification.

“In an unreasonable and unbearable manner, a person can be put on the spot, just based on assumptions,” Frenkel told Channel 2 after announcing he would be dropping his candidacy.

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