(CN) - President Donald Trump on Wednesday nominated Treasury Undersecretary David Malpass to lead the World Bank, calling him "a strong advocate for accountability" at the global lending institution that Malpass has frequently criticized.
During a Wednesday press conference, Trump claimed that if selected as World Bank Group president, Malpass, 62, will help rein in mismanaged funding programs and overspending at the bank, which provides loans to developing countries with the stated goals of eradicating poverty, widening access to education and improving public health.
"America's the largest contributor to the World Bank, giving it over $1 billion every year," Trump said. "My administration has made it a top priority to ensure that U.S. taxpayers' dollars are spent effectively and wisely, serve America's interests and defend American values."
Trump said his former economic adviser “has been a supporter for a long time.”
"Even before I ran, he liked the job I did. I like those people somehow," the president said.
In addition to saying that improvements should be made to the 189-nation World Bank’s lending programs, Malpass was critical of the institution’s relationship with China in remarks to the nonprofit think tank Council on Foreign Relations in November 2017.
“The World Bank’s biggest borrower is China,” he said at the time. “Well, China has plenty of resources, and it doesn’t make sense to have money borrowed in the U.S., using the U.S. government guarantee, going into lending in China for a country that’s gotten other resources and access to capital markets.”
Currently working as undersecretary of international affairs in Trump's Treasury Department, Malpass is an economist who previously held jobs as deputy assistant secretary of the treasury under President Ronald Reagan and deputy assistant secretary of state under President George H.W. Bush.
He was also a chief economist at investment bank Bear Stearns up until its collapse at the outset of the 2008 global stock market crash. His bid for a New York Senate seat in 2010 failed in the primary stage.
Nobel Prize-winning economist and New York Times columnist Paul Krugman publicly scoffed at the nomination, echoing widespread criticism of Malpass's understanding of economics in the aftermath of the financial crisis.
"I'd forgotten the sheer badness of Malpass's arguments for raising interest rates when unemployment was 9%. This guy doesn't understand economics at all -- so let's put him in charge of the World Bank!" Krugman tweeted.
If selected by the World Bank Group, Malpass will take over for Obama-era nominee Jim Yong Kim, who resigned as president effective Feb 1.
Though an interim president from Bulgaria, Kristalina Georgieva, is currently at the World Bank Group's helm, every formally selected president since the group's formation more than 70 years ago has been from the U.S.
The United States is the World Bank Group's largest shareholder, with approximately 16 percent of the voting power. Japan is second, with roughly 6.9 percent of the voting power, according to the World Bank web site.
During testimony before the U.S. House Financial Services Committee in December, some of Malpass' views on the World Bank Group and other so-called "multilateral development banks" were highlighted in detail.
Malpass was testifying in his role as undersecretary of international affairs, through which he worked with Treasury Secretary Steve Mnuchin on U.S. trade policy as well as World Bank and International Monetary Fund matters.
When pressed by Congressman Andy Barr, R-Ky., about perceived, and in some cases admitted, inefficacy in a handful of World Bank lending programs, Malpass said he hoped the bank would improve its self-scrutiny.
"One thing we do ... or that I have tried to do is get us to put sufficient weight on loan review, and also the forward pipeline. So as the World Bank thinks about loans, it is thinking sufficiently about how ... that loan [will] improve the conditions for the poor," Malpass said. "So we can try to build benefits in from the very start, rather than looking at the quantity of loans. You know there's a temptation in a big organization just to say, 'Let's puff up our book.'"
At one point he likened the global bank to a vestigial institution from the post-World War II reconstruction era.
"These are legacy institutions that came after World War II that simply exist. And what we're trying to do is make them function as effectively as possible," Malpass said.