While at the Fed, Stanley Fischer served as chairman of the board’s Committee on Financial Stability and the Committee on Economic and Financial Monitoring and Research. | AP Photo
Federal Reserve Vice Chairman Stanley Fischer Wednesday submitted his resignation from the central bank, in a surprise move that gives President Donald Trump the chance to nominate more than half the Fed’s board whenever he chooses.
Fischer, whose departure is effective Oct. 13, cited “personal reasons” for his decision to leave the board at a time when it is considering further interest rate hikes and unwinding the massive portfolio of assets that it purchased to prop up the economy.
With only three of the seven board members staying past October, Fischer’s exit puts increased pressure on the Senate to approve Randal Quarles, nominated for the central bank’s top regulatory job and Trump’s only Fed pick to date. Quarles, a Treasury Department veteran, is set to be approved by the Senate Banking Committee on Thursday.
Fischer’s move will also allow Trump to nominate his own vice chair at the same time he puts forward a nominee to head the central bank. Chair Janet Yellen’s term at the helm of the Fed ends at the beginning of February. Fischer’s vice chairmanship would not have expired until June.
“This gives the White House significant control over the Federal Reserve,” Cowen analyst Jaret Seiberg said in a note to clients. “There will be five of the seven members who owe their jobs to the President. At a minimum we would expect his nominees to broadly support deregulation” of banks.
Carnegie Mellon University Professor Marvin Goodfriend is expected to be nominated for a seat that is already open, while another slot must go to someone with community banking experience.
Fischer, an appointee of former President Barack Obama and a close Yellen ally, is a strong proponent of the regulations imposed on banks after the financial crisis.
“During my time on the Board, the economy has continued to strengthen, providing millions of additional jobs for working Americans,” he said in his resignation letter. “Informed by the lessons of the recent financial crisis, we have built upon earlier steps to make the financial system stronger and more resilient and better able to provide the credit so vital to the prosperity of our country’s households and businesses.”
The 73-year-old economist has had a long and storied career in international finance. He served as governor at the Bank of Israel from 2005 to 2013, vice chairman of Citigroup from 2002 to 2005, first deputy managing director at the International Monetary Fund from 1994 to 2001, and chief economist at the World Bank from 1988 to 1990.
While at the Fed, Fischer served as chairman of the board’s Committee on Financial Stability and the Committee on Economic and Financial Monitoring and Research. He also represented the Fed at global forums, including the Financial Stability Board and the Bank for International Settlements.
Yellen praised him in a statement: “Stan’s keen insights, grounded in a lifetime of exemplary scholarship and public service, contributed invaluably to our monetary policy deliberations. He represented the Board internationally with distinction and led our efforts to foster financial stability. I’m personally grateful for his friendship and his service. We will miss his wise counsel, good humor and dry wit.”
Fischer’s departure isn’t likely to significantly change the decision over whether to raise interest rates in December, Wrightson economist Lou Crandall said.
“If Chair Yellen feels that she wants to tighten then, Fischer presumably would have voted with her, but I think she could carry a majority either way,” he said.
Fischer helped Yellen guide interest rates slowly up after a decade of being near zero and develop the Fed’s plan for shrinking its asset holdings, which the central bank expects to launch soon.
“On that front, we give the two credit as the Federal Reserve has gradually withdrawn support without causing interest rates to spike or the economy to unravel,” Seiberg said.
Updated 09/06/2017 01:11 PM EDT