President Donald Trump nominated an outspoken World Bank critic to head the development fund on Wednesday, his latest effort to reshape and reform a set of global institutions he’s viewed skeptically.
Trump’s nominee, David Malpass, is a former Wall Street banker who currently serves as undersecretary for international affairs at the US Treasury. If confirmed by the World Bank’s board of directors, he would assume oversight of an institution he’s decried as misguided in its practices, particularly with regard to China, and swollen in its expenses.
“My administration has made it a top priority to ensure that US taxpayers’ dollars are spent effectively and wisely, serve American interests and defend American values,” Trump said as he nominated Malpass from the White House Roosevelt Room. “David has been a strong advocate for accountability at the World Bank for a long time.”
Malpass emerged as Trump’s choice after the abrupt resignation last month of Jim Yong Kim, with whom Trump’s daughter and adviser Ivanka Trump developed a close working relationship on womens’ economic empowerment.
Some development experts have denounced the pick, suggesting Malpass would use the post to undermine the bank, which offers loans to developing nations for projects on infrastructure, health, energy and other areas.
Still, others close to the bank have been less fateful, suggesting Malpass was qualified and a known entity, even if he’s directed criticism toward the bank’s practices.
Speaking after Trump, Malpass called the World Bank the “world’s premier development institution.” Citing work underway with the Trump administration, Malpass said there was a “great opportunity now to implement these constructive reforms that will lead to faster growth and greater prosperity.”
Trump has adopted a mistrustful approach to many global institutions, including the United Nations, NATO, the World Trade Organization and the International Criminal Court. He’s appointed envoys who share those views, including national security adviser John Bolton.
Aides say Trump is more interested in making those global institutions work better and provide better results for the United States.
That includes the World Bank, which some Trump administration officials believe has overstepped its mandate and failed to keep up with current geopolitical and economic trends.
Chief among Malpass’ critiques are the large loans the World Bank sends to China, the world’s second largest economy and the bank’s biggest borrower. He says that no longer makes sense as the country advances into an economic superpower. Much better, he’s said, to focus lending on developing nations who cannot secure capital elsewhere.
“The World Bank’s biggest borrower is China. Well, China has plenty of resources,” he said at a Council of Foreign Relations forum in 2017, after he joined the administration. He added: “One of the things we’ve challenged the World Bank to do is graduate countries, that as they are successful, let’s reduce the lending there and allow more lending to countries that need it.”
Asked how that view was being met inside the World Bank, Malpass admitted there was “a lot of resistance” to his views, but added: “We’re having a good dialogue with them.”
He’s also sharply criticized the bank’s workforce as bloated and overpaid, encouraging the institution to limit salary increases.
Malpass acted as an economic adviser on Trump’s 2016 presidential campaign. He previously worked on Wall Street as the chief economist at Bear Stearns, the investment bank whose failure in early 2008 helped trigger the financial crisis – something Malpass wrote in a 2007 opinion article for the Wall Street Journal was an unlikely risk.
Seven months before Bear Stearns collapsed, Malpass downplayed the likelihood of a global economic calamity, claiming housing and debt markets didn’t play major roles in the US economy.
“It’s more likely the economy is sturdy and will grow solidly in coming months, and perhaps years,” he wrote.
Critics say that alone should disqualify him.
“David Malpass is a Trump loyalist who has committed economic malpractice on a wide range of topics,” said Justin Sandefur, a development economist and senior fellow at the Center for Global Development. “There is no case for Malpass on merit. The question now is whether other nations represented on the World Bank’s board of governors will let the Trump administration undermine a key global institution.”
The position, which does not require confirmation by the Senate, has as a courtesy been named by the American president since the bank was founded after World War II. That’s caused some consternation among some of the bank’s other members, who believe the institution’s presidents should be selected from a wider pool of candidates.
Challenges to the practice have never been successful, though in 2012 a number of alternate candidates were put forward, including from Nigeria and Colombia. Officials said the process of securing support for President Barack Obama’s nominee Kim amounted to arm-twisting.
As the Trump administration was reviewing candidates, officials quietly gauged support among the bank’s board of directors to ensure a serious challenge effort could be overcome, according to a person familiar with the effort. The White House believes European nations will support Malpass, which would render it difficult for other countries to put forward a successful candidate.
The administration’s selection process was led by the Treasury Secretary Steven Mnuchin, with input from Ivanka Trump.
The President’s daughter praised the choice in a statement distributed by the White House.
“David’s extensive knowledge of the World Bank’s challenges and opportunities make him a uniquely qualified steward of a great institution that is operating below its full potential,” she wrote.
In the course of the selection process, several candidates interviewed with the President. Those who were considered included former Pepsi CEO Indra Nooyi and Heidi Cruz, a former financial executive and the wife of Sen. Ted Cruz of Texas. Both would have been the bank’s first female president.