‘Lawrence Summers rejects post of Bank of Israel governor’

Acting governor Karnit Flug said to be back in the running; Netanyahu rebuffed by former US Treasury secretary, says Channel 2

Lawrence Summers (photo credit: AP Photo/J. Scott Applewhite, File)
Lawrence Summers (photo credit: AP Photo/J. Scott Applewhite, File)

Lawrence Summers, a former Treasury secretary and president of Harvard University, rejected a request from Prime Minister Benjamin Netanyahu to become governor of the Bank of Israel, Channel 2 reported.

Netanyahu and Finance Minister Yair Lapid have been striving all year to find a successor to Stanley Fischer, who announced in January that he would be leaving the post and who stepped down in June.

Summers was one of a number of overseas candidates reportedly approached by Netanyahu to have spurned the job. Summers had been widely seen as a possible new head of the US Federal Reserve, but withdrew from consideration last month in the face of rising opposition.

New Haven-born Summers is the son of two economists, Robert Summers (who changed the family surname from Samuelson) and Anita Summers. A renowned economist, Summers built close ties to Obama when he led the president’s National Economic Council in 2009 and 2010.

Bank of Israel acting governor Karnit Flug (Photo credit: Yonatan Sindel/Flash90)
Bank of Israel acting governor Karnit Flug (Photo credit: Yonatan Sindel/Flash90)

After a meeting late Wednesday, Netanyahu and Lapid said they would name a new governor by Sunday.

Hebrew media speculation has it that the leading candidate for the influential post, in a process that has dragged on for over days, is Professor Zvi Eckstein. Eckstein is the dean of the School of Economics at Herzliya’s Interdisciplinary Center (IDC), and served as the Bank of Israel’s deputy chief between fron 2006-11.

Bank of Israel Governor candidate Professor  Zvi Eckstein (photo credit: Yossi Zamir/Flash90)
Professor Zvi Eckstein (photo credit: Yossi Zamir/Flash90)

But Karnit Flug, the bank’s acting director whom Fischer had recommended for the post, but who Netanyahu made clear he did not want, was said Saturday to be back in the running.

Two candidates — Jacob Frenkel and Leo Leiderman — dropped out after accepting the post. Frenkel, a previous governor, became embroiled in reports of a shoplifting scandal, which he denied, and Leiderman faced complaints to the vetting committee, known as the Turkel Commission, which he might have resolved but chose to avoid the protracted process.

Another candidate is the internationally renowned Professor Mario Blejer. A third candidate, Victor Medina, is considered an outside bet.

Channel 10 news revealed over the summer that three Nobel Prize-winning American economists, Thomas J. Sargent, Robert Lucas, Jr. and Edward C. Prescott, recommended Eckstein to Netanyahu and Lapid.

Fischer, an American-Israeli economist, served as bank chief from 2005 until this summer, having announced his intention to step down at the start of the year. He was previously chief economist at the World Bank.

AP contributed to this report.

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