Summers Said to Turn Down Request to Run Bank of Israel

Former U.S. Treasury Secretary Lawrence Summers rejected an approach about taking charge of Israel’s central bank after missing out on the Federal Reserve’s top job, according to a person with knowledge of the appointment process.

Prime Minister Benjamin Netanyahu asked Summers to take the Bank of Israel job during his visit to the U.S. starting in late September, the person said, declining to be identified because of the issue’s sensitivity. A spokeswoman for Summers, Kelly Friendly, said he would have no comment.

The approach to Summers came after two of Netanyahu’s nominees withdrew their candidacies during the vetting process, leaving a vacancy at the central bank after Stanley Fischer’s departure in June. The Israeli premier announced yesterday that Karnit Flug, Fischer’s deputy who had been serving as interim chief, would take over on a permanent basis.

Summers, a Harvard University economics professor, was in the running for the equivalent job in the U.S. He withdrew as a candidate to replace Ben S. Bernanke as chairman of the Federal Reserve before Janet Yellen was nominated for the job earlier this month.

If approved, Flug will become the first woman to run the Bank of Israel, and the third female central bank chief to be named in recent months, after Yellen and Elvira Nabiullina in Russia.

Fischer had chosen Flug as his deputy, and backed her as his successor. Netanyahu and his finance minister, Yair Lapid, have been criticized by Israeli lawmakers for repeatedly looking elsewhere before eventually giving Flug the job.

Shelly Yachimovich, leader of the opposition Labor Party, told Haaretz newspaper before the appointment that Netanyahu and Lapid “should go to the home of Dr. Karnit Flug to apologize and beg her to take the job.”

Summers, who had been favored by President Barack Obama for the Fed job, said at the time of his withdrawal that his nomination would lead to an “acrimonious” confirmation process that wouldn’t be in the interests of the economy or the government.