Stanley Fischer, the former Bank of Israel governor and now U.S. President Barack Obama’s nominee to be No. 2 at the U.S. Federal Reserve, on Thursday defended his ties to Citigroup, saying he would have been ill-prepared for his last central banking job without his experience at the megabank.
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“My three years at Citigroup were the most important element in my education that enabled me to be an effective supervisor of banks, which was one of my duties as Governor of the Bank of Israel,” Fischer told members of the Senate Banking Committee.
Fischer left Citigroup in 2005 to become Israel’s top central banker, a post he held until the middle of last year.
“Without that experience I would have come to it largely with an academic background, without ever having seen the inside of a bank,” said Fischer.
His comments came in response to a query from Sen. Elizabeth Warren, who suggested that the administration’s penchant for tapping former Citigroup executives to fill top economic posts potentially put the government “under the grip of a tight-knit group” and made it vulnerable to “groupthink.”
Fischer’s role at Citigroup had been expected to draw some criticism from lawmakers keen to hire a top U.S. banking regulator who will be tough on financial institutions. Warren was the only lawmaker to press the issue, however, and Fischer parried her criticism over the lack of “diversity” in the backgrounds of top administration officials by pointing out that he there are plenty of non-Citibank officials whom he also knows and respects.
Overall the hearing suggested there is little to differentiate Fischer’s thinking on monetary policy from the Fed’s new chair, Janet Yellen. “I think the mixture that we are seeing coming out of [the] Fed now is approximately appropriate,” he told the panel.
Speaking after Fischer’s exchange with Warren, Sen. Charles Schumer said he personally believed Fischer’s banking experience would be an asset at the Fed, along with his bona fides, Schumer joked, as a fellow New Yorker.
“I am very proud to be a New Yorker,” responded Fischer, who holds both U.S. and Israeli citizenship and who grew up in southern Africa, “but I have to work on my accent, I understand.”
Schumer broke in: “You sound to me like you’re from Brooklyn.”