Even more than before, President Donald Trump now has the chance to entirely reshape the Federal Reserve. Janet Yellen’s term as chair ends early next year, and her deputy, Stanley Fischer, has just resigned, citing personal reasons. Soon Trump will be able to appoint a new person to the top job and three other positions on the seven-member board — not counting the one he’s already given to Randy Quarles.
Fischer’s departure, coming months earlier than expected, is a serious loss. His combination of intellect, experience and collegiality is virtually irreplaceable.
One of the world’s most distinguished macroeconomists, he conducted influential research while a professor at MIT, co-authored standard texts, and was a revered teacher — among his former students are Mario Draghi, head of the European Central Bank, and former Fed chief Ben Bernanke. He held the top economics jobs at both the World Bank and the International Monetary Fund, was a vice chairman of Citigroup, and between 2005 and 2013 was the notably successful head of Israel’s central bank.
A luminary among central bankers, Fischer was amply qualified to run the Fed. That he was content to serve as No. 2, acting as Yellen’s close ally, attests to his lack of vanity. His hallmarks as a communicator of the Fed’s thinking, a role he recognized as crucial, were clarity and open-mindedness. All these traits will be sorely missed.
The case for reappointing Yellen, which Trump hasn’t yet ruled out, just got stronger. Fischer’s exit raises the premium on continuity, expertise and experience, and the current Fed chair embodies all three.
History’s verdict on presidents rests more than they might wish on the competence of the Fed during their time in the White House. When it comes to those other Fed appointments, the president would be smart to reflect on what made Fischer such a good choice and strive, for his own sake as well as everybody else’s, to choose as wisely.