Trump nomination to shake up World Bank

The World Bank may be poised for a shake-up.

US President Donald Trump plans to nominate David Malpass, who has been a critic of the bank, to lead the institution focused on global poverty.

Malpass’ selection was confirmed by a senior administration official who spoke on condition of anonymity because the official wasn’t authorised to comment publicly on personnel decisions. Trump is expected to make the announcement later this week.

Malpass, now the undersecretary for international affairs at the Treasury Department, has been an outspoken skeptic of the 189-nation World Bank, a leading source of funding for economic development. The World Bank provides low-cost loans for projects around the world. Among its key missions is helping combat poverty in developing countries.

Malpass has called for curbing the World Bank’s financial reach and has criticised its lending to China, one of the bank’s leading recipients of aid.

If the World Bank’s directors approve his nomination, Malpass would be positioned to overhaul an institution that, he has argued, has become too focused on its own expansion and prestige rather than on the interests of poor countries.

“A host of organisations are creating mountains of debt without solving problems,” Malpass said in a speech last year. “Huge organisations like the World Bank and the many multi-lateral development banks have created an environment where their own growth ends up being as important as their clients’ growth.”

Having Malpass at the helm of the World Bank would fit a pattern inside the Trump administration of tapping officials to lead institutions whose core missions they have publicly questioned or opposed.

Malpass, 62, has straddled the top echelons of government and Wall Street, having worked in the Reagan and George H.W. Bush administrations and as the chief economist for the defunct bank Bear Stearns.

Malpass’ public forecasting has at times been misguided and arguably shaped by his political leanings.

In 2007, he wrote on the editorial pages of The Wall Street Journal that the “economy is sturdy and will grow solidly in coming months, and perhaps years”. Over the subsequent months, the United States toppled into its worst financial crisis and recession since the Great Depression of the 1930s.

In the same editorial, Malpass dismissed the risks from subprime mortgages by saying, “Housing and debt markets are not that big a part of the US economy, or of job creation.”