Stanley Fischer, the Federal Reserve’s most prominent monetary policy ‘hawk’ and one of the most vocal advocates of tough bank supervision, is stepping down ‘for personal reasons’, the Fed announced Wednesday.
The news means that both the chair and vice-chair positions at the Fed will become vacant within five months of each other, given that Janet Yellen’s term as chairwoman is due to expire in February. As such, President Donald Trump’s administration will have even more opportunity to stamp its authority on the Fed, as he and the Republican-led Congress seek to roll back much of the regulation that was imposed on banks in the wake of the 2008 crisis.
Trump has already appointed Randal Quarles, a former Treasury veteran under George W. Bush, to the position of head of banking supervision at the Fed, effectively replacing Daniel Tarullo, the man who implemented much of the Dodd-Frank agenda over the last seven years. He is widely rumored to want to replace Yellen with Gary Cohn, the Goldman Sachs alum who currently heads the President’s National Economic Council.
Cohn is a strong supporter of easing regulation on banks, an agenda that Fischer had called “extremely dangerous” in an interview last month.
Fischer, 73, had been due to stay as vice-chairman until the middle of next year and to stay on the Fed’s board of governors until 2020. In a terse resignation letter to the President, which the Fed released Wednesday, Fischer dropped a further implicit warning about rolling back regulation too far, saying: “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.”
Fischer’s resignation appears to bring the curtain down on a long and varied career. As deputy head of the International Monetary Fund, Fischer had been a key figure in the response to the Asian financial crisis in the late 1990s. He also served as governor of the central bank of Israel from 2005 to 2013.