President Donald Trump plans to nominate David Malpass, a former Bear Stearns economist, as U.S. Treasury undersecretary for international affairs, said a person familiar with the deliberations. His first job will be to help guide policy as the world wonders whether the new administration will make a habit of talking up or down other countries’ currencies.
If confirmed by the Senate, Malpass, 60, would bring extensive government experience to an economic team that has little background in public service. He served as a deputy assistant secretary in the Treasury and State departments during the administrations of Ronald Reagan and George H.W. Bush.
Malpass will report to the Treasury secretary on the U.S.’s international economic relationships, most importantly with China. Ties between the world’s two largest economies have become more tenuous since Trump’s election. The Republican and his advisers have not only talked about China and Japan artificially manipulating their currencies — after walking back a pledge to label the former as a manipulator in the early days of the administration — but have also moved foreign exchange markets by jawboning the U.S. and Canadian dollars, Mexico peso, and the euro.
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Trump’s economic agenda includes protectionist trade policies at odds with unbridled strength in the dollar. Group of 20 nations, wary of a trade war with the U.S., may allow for a grace period on currency chatter during the start of an administration, but habitual talking up and down of currencies could violate a pact to “refrain from competitive devaluations,” which was reaffirmed in the September G-20 communique.
Malpass is also among a small chorus of Republicans that see the Federal Reserve’s asset purchases as “ very harmful” to the economy by channeling credit to corporations and the government instead of to new, more dynamic small businesses.
Malpass, who held a high-profile role at Bear Stearns before its collapse in 2008, may face heat from Democrats already bitter over the number of Wall Street alums joining the Trump administration. Confirmations in the Senate are gummed up, with Democrats debating for 30 hours or boycotting committee votes on some cabinet picks. Treasury Secretary nominee Steven Mnuchin is expected to be confirmed in a vote on Monday.
As Bear Stearns’ chief economist, Malpass in 2007 wrote a Wall Street Journal column advising markets not to panic over a $2 trillion loss in equity markets, calling it a “correction” that may eventually drive economic growth. The following year, that credit crunch turned into a global crisis, taking Bear Stearns down with it.
After Bear Stearns’ demise Malpass founded Encima Global, an economic research company, and has been a frequent commentator in print and on television. He served on the Trump campaign’s economic advisory council.
Malpass would replace Nathan Sheets, who served as undersecretary of international affairs in the final stages of the Obama administration. Lael Brainard, now a Fed governor, also held that role under Obama from 2010 to 2013.