David Malpass leaves a hotel for a meeting with Chinese officials in Beijing, China. (Photographer: Giulia Marchi/Bloomberg)

Trump to Nominate David Malpass as New World Bank Chief, Officials Say

(Bloomberg) -- President Donald Trump will nominate senior Treasury official David Malpass to lead the World Bank, according to two administration officials, moving to place at its helm a critic of the development lender and its internationalist principles.

The announcement will be made this week, after Trump delivers his State of the Union address on Tuesday night, according to the officials, who asked not be identified before the the nomination was made public. The administration on Monday started reaching out to World Bank member countries to rally support for Malpass’s nomination, one of the officials said.

Trump to Nominate David Malpass as New World Bank Chief, Officials Say

Malpass has portrayed the World Bank as too big, too inefficient and too reluctant to wean developing countries that have become engines of growth. His public record suggests Malpass may scale back the bank’s ambitions at a time when China has escalated lending to the developing world.

The lender’s executive board, which represents the 189 member nations, has the final say in choosing the leader.

The nomination risks provoking opposition from countries that have defended the existing global order against Trump’s criticisms. It could reignite calls for the bank to break with tradition and appoint a non-American in a recognition of the growing clout of emerging markets such as China and India.

Economic Adviser

Malpass, 62, joined Trump’s campaign early as an economic adviser. As undersecretary of international affairs at the Treasury, he has enthusiastically supported the president’s agenda of tax cuts and deregulation to bolster economic growth.

He has also echoed the president’s doubts about international cooperation, declaring that “multilateralism has gone substantially too far” by straying from the “values of limited government, freedom and the rule of law.”

He has pushed the World Bank to lend less to China, arguing the Asian nation has the financial resources to support itself, and has criticized Beijing for not moving fast enough to open up its economy, the world’s second largest.

Sharp Break

His posture toward China is a sharp break from the stance of Jim Yong Kim, who abruptly resigned as head of the bank in January to become vice chairman of investment firm Global Infrastructure Partners. Kim, who was nominated by President Barack Obama, praised China for lifting hundreds of millions of its people out of poverty “almost through brute economic growth.”

Kim welcomed China’s launch of the Asian Infrastructure Investment Bank, a development lender focused on providing loans in Asia that some have seen as a vehicle for expanding Beijing’s influence and a rival to the World Bank. The U.S. has refused to join the Asian bank, which now has 93 member countries. China is also ramping up lending through its ambitious plans to finance new railways, ports and other infrastructure across Asia.

Malpass held senior posts at the Treasury and the State departments under Ronald Reagan and George H. W. Bush. He served as chief economist at Bear Stearns, an investment bank that collapsed during the global financial crisis.

His departure would leave open the international affairs post at Secretary Steven Mnuchin’s Treasury department, a key role within the administration on global economic matters. Malpass has been closely involved in talks with Beijing to resolve the trade war between the two countries.

Treasury Personnel

Malpass struggled at Treasury to retain personnel in his unit, with about 20 career staff members quitting in less than a year. Some of the departing officials decided they couldn’t support the administration’s trade policies, while others chafed at Malpass’s leadership style, according to six people familiar with the matter.

The World Bank was conceived during World War II at a conference in Bretton Woods, New Hampshire, that also spawned the International Monetary Fund. Treasury official Harry Dexter White and the British economist John Maynard Keynes were the chief architects of the two institutions, which underpinned the postwar economic order.

The bank’s original purpose was to finance the reconstruction of Europe. But under Robert McNamara, who led the bank from 1968 to 1981, it shifted its focus toward financing development in the world’s poorest countries, a mission it maintains to this day.

Largest Shareholder

The U.S. is the World Bank’s largest shareholder. Under an informal trans-Atlantic pact, an American has always run the institution, while the managing director of its sister institution, the International Monetary Fund, has always been European.

Some experts say it’s time to end the arrangement. “The changing global economic landscape makes the convention outdated. There are many excellent potential candidates across the globe, just as there probably are in the U.S.,” former U.S. IMF executive
director and Treasury official Mark Sobel said in a recent article.

©2019 Bloomberg L.P.