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Stanley Fischer, governor of the Bank of Israel, prefers to focus on the big stuff. He's said time and again that he didn't come all the way from the United States to haggle with unions, but to set monetary policy. But after he politely - perhaps too politely - asked Bank Hapoalim's controlling shareholder, Shari Arison, to replace the bank chairman Danny Dankner, Fischer found himself in a position he dislikes: embroiled in a personal, virulent battle with Dankner, Arison, their consultants, and some of the most powerful oligarchs in Israel.

The battle is escalating by the day. Late last week it took a wild turn, if not downright criminal. Arison came down to the lobby at the bank's headquarters to face waiting television cameras, and said: What Fischer and banks regulator Rony Hizkiyahu are doing amounts to corruption, McCarthyism, entrapment and nationalization of the bank.

Fischer corrupt? Everyone knows that if there is anyone in Israel who is not acting out of self-interest, its Stanley Fischer. Based on Arison's latest announcement alone, the heads of the central bank have a reasonably good case for slander against the richest woman in Israel.

"Corruption" was the most distressing choice of verbiage, especially since it was used by a representative of a group of wealthy people who have been proven to control part of the press - and the reporters who rallied to their side.

It's not really surprising. Bank Hapoalim is a major advertiser in Israel, so the press isn't eager to confront it. But it's not only the media that that stands silent. This is group of affluent people who enforce their will on much in the business and public world. The fact is, even if in private discussions many agree that Dankner has to go, only a few have dared express it publicly.

And why is that?

In a world where Dankners and Arisons and Bank Hapoalim provide work for many economists, bankers and consultants, and will continue to do so, no one wants to go on record against them.

Fischer, of course, will not sue Arison for defamation. He doesn't care for such confrontations. But what will happen if the central bank governor gets tired of the whole thing and decides to back off? Or alternatively, what will happen if the compromise agreement offered by one of Dankner and Arison's consultants, which calls for little more than a scolding and a promise to do better in the future, is accepted?

The Dankner precedent

Arison's people are already offering compromises that would oust Dankner but keep Zion Keinan, who the Supervisor of Banks feels is not competent to serve as Hapoalim's chief executive. The result would be a calamity. Fischer and Hizkiyahu will rid themselves of a hot potato, but they will be inflicting enormous harm on the banking system and the authority of the law in Israel.

The first thing that will be damaged is the supervision of banks. It is obvious to anyone that the moment this pack of high rollers sees that it has successfully bent the regulator's will through a campaign of refusals, tongue-lashings and personal defamation, no bank will ever accept the authority of the regulator again. Refusal to approve appointment of a relative? Demands for write-offs? Order to increase equity? From now on the "Dankner precedent" will supersede all. Banks will hire themselves a team of lawyers and drag the matter through a swamp of bureaucracy until the regulator surrenders.

In 2003, for instance, motivated by concern over excess centralism, the Supervisor of Banks placed limits on the provision of credit to groups of large-scale borrowers and on their associations - which neither the banks nor the oligarchs were happy with but complied nevertheless. In 2009, complicity with such an order cannot be taken for granted. Banks are likely to question the regulator's authority, demand explanations and proof, and grind away until the order disappears.

But it's not just the Supervisor of Banks that is in peril. If the central bank governor and the banks regulator can be bent, why shouldn't the wealthy and powerful bend other supervisory institutions to their will?

Anyone who succeeded in breaking down Stanley Fischer will have no compunctions over a similar strategy against the anti-trust authority, the Finance Ministry, accountant general, the Tax Authority, and in the end, the legal system itself.