Frenkel Withdraws Candidacy for Bank of Israel Governor

JPMorgan Chase International Chairman Jacob Frenkel
JPMorgan Chase International Chairman Jacob Frenkel speaks during an interview in New York, on Oct 18, 2012. Photographer: Scott Eells/Bloomberg

Jacob Frenkel withdrew his candidacy to retake the job of Bank of Israel governor, saying he suffered an “avalanche of abuse” since Prime Minister Benjamin Netanyahu nominated him last month.

Netanyahu and Finance Minister Yair Lapid said they planned to name another candidate in the “coming days,” according to a text message sent to reporters. Frenkel’s candidacy hit a bump after the Haaretz newspaper reported he had left a Hong Kong duty-free shop without paying for an item, an incident that the former Bank of Israel Governor said was a misunderstanding.

Frenkel, who was due to replace Stanley Fischer as governor, said by phone that he took the decision after the atmosphere surrounding his nomination became “too poisonous.”

His decision is a setback to Netanyahu’s efforts to appoint a replacement to Fischer with international credentials to lead the central bank. Frenkel’s career trajectory has taken him from the halls of the University of Chicago to the research files of the International Monetary Fund to the boardrooms of JPMorgan Chase & Co. His decision to withdraw is a “big miss” for Israel, Lapid said in a statement.

“Netanyahu and Lapid both have called me to try to dissuade me, to stay a little longer and all the rest,” said Frenkel, 70, who served as governor between 1991 to 2000. “From day one, I thought I should let somebody else do it. I allowed my arm to be twisted. But if it’s not fun, why do it at this stage of my life?”

‘Fischer’s Policies’

Ori Greenfeld, head of macroeconomics at Psagot Investment House, said the decision didn’t come as a surprise.

“Frenkel’s problems have been going on for weeks so it’s not much of a shock that he’s dropping out,” Greenfeld said in a telephone interview. “For now Flug’s in charge and it seems clear that she’s going to continue with Fischer’s policies,” he said, referring to acting governor Karnit Flug.

In her first meeting in charge of the bank’s monetary policy panel, Flug kept Israel’s benchmark interest rate unchanged at 1.25 percent today. The central bank said that indicators suggest “continued growth of economic activity at the relatively moderate pace of the past two years, which eased concerns of an additional slowdown.”

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