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A World Bank head quits

 


The Trump appointed head of the World Bank, David Malpass, has resigned. 

For those who need a refresher: the head of the WB, a Bretton Woods institution, is appointed by the President of the United States because of a deal made at that 1944 conference. The head of its sister institution, the International Monetary Fund, is under the same deal always a European (chosen by the IMF's own executive board.) 

Anyway: Malpass is leaving -- the reasons why are not obvious -- and his departure means that President Biden has an appointment opportunity he had not expected. 

On Malpass' way out the door, I want to make one point about his earlier career as a business executive and economist. Malpass was the Chief Economist at Bear Stearns for six years. Those happened also to be the last six years of the existence of Bear Stearns as an independent entity. The post of Chief Economist disappeared when Bear was purchased by JPMorgan Chase in March 2008, as the Subprime Crisis of 2007 was turning into the Global Financial Crisis. 

How much did JPMorgan pay for Bear? Only 6% of what the company's market capitalization had been 12 months before. I wrote about the demise of Bear in chapter five of my book, GAMBLING WITH BORROWED CHIPS.

Though in general, my book blames misguided monetary policy and other macro difficulties for the crises of those years, I have to say: Bear's death cannot be said to have covered its Chief Economist with glory. Contingency planning and risk management are the chief obligations of the Chef Economist of a major investment bank, and Bear seems to have been taken utterly by surprise. 

It is not, I think, a catastrophe for the world that Malpass is leaving the World Bank.    

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  1. Paul D. Van PeltFebruary 23, 2023 at 7:53 AM

    Nor, (we hope) was it a catastrophe that he was appointed in the first place.

    ReplyDelete

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