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Treasury Department Responsible For Trade Policy Rocked By Wave Of Departures

Courtesy of ZeroHedge. View original post here.

President Trump’s war on the Washington swamp has had some unintended casualties at the Treasury Department’s international affairs unit – which Bloomberg characterized as a “key office in the Trump administration’s escalating trade battles with China and Europe” – as roughly 10% of the department’s career staff have quit since September. And President Trump’s federal hiring freeze has made it impossible to replace them, just as the administration’s trade war with China has been ramping up.

According to Bloomberg, most of the departures have blamed President Trump’s pick to run the department for inspiring them to leave. David Malpass, who has been a vocal proponent of Trump’s protectionism, is probably best known for being Bear Stearns chief economist in the years leading up to the financial crisis.

Malpass

David Malpass

According to the department’s malcontents, Malpass has been involved in some high profile bungles recently, like when he said back in March that Beijing had ended formal economic talks on the eve of the G-20 summit in Buenos Aires, before later saying that he “misspoke.”

But even with full staffing, some people say that Malpass, who was confirmed by the Senate, is mismanaging the unit. They note that Treasury Secretary Steven Mnuchin has dressed down Malpass for striking too hard a tone in public statements about China — an episode that harmed morale throughout the unit.

Malpass, 62, worked in the Treasury and State Departments during the administrations of Ronald Reagan and George H.W. Bush and later became chief economist at the now-defunct Bear Stearns. Malpass was a senior economic adviser on Trump’s presidential campaign. At Treasury, he succeeded Nathan Sheets, who held the post under Obama.

In one incident, Malpass erroneously said on the eve of the March G-20 finance summit in Buenos Aires that the U.S. had ended formal economic talks with Beijing. Mnuchin privately reprimanded Malpass after the incident, according to three people familiar with the matter. Malpass had to correct the record, saying he “misspoke.”

Among the departing staff is Mark Sobel, a 40-year veteran of the department who was respected for having “the most institutional and cultural knowledge of international affairs at Treasury.” Sobel has blamed the administration for, among other things, allowing too many officials to speak publicly about dollar policy (unlike previous presidents, Trump has been more than willing to complain at about the value of the dollar).

Sobel is seen as having the most institutional and cultural knowledge of international affairs at Treasury. He was known in the building and among foreign counterparts over the past four decades as a tireless and at times uncompromising negotiator who has been a key U.S. representative behind the scenes at dozens of G-20 and G-7 finance officials meetings.

Weeks after retiring, Sobel wrote a column called “America’s currency confusion” for a London-based think tank, chastising Mnuchin and the rest of Trump’s economic team for eroding U.S. credibility by having too many officials talking about the dollar policy.

Sobel moved forward his departure in part because of Malpass’s move to install his chief of staff, Mauricio Claver-Carone, at the International Monetary Fund as executive director while Trump’s nominee awaits Senate confirmation. Sobel, according to the three people, didn’t want to work for Claver-Carone, an attorney who previously led a group that promoted embargoes against Cuba.

Robert Dohner, an Asia specialist who played a key role in China’s decision to allow the yuan to strengthen, has also left the department.

Several younger staffers — seen as the next generation of non-political brain power — have also left, according to the people, who spoke on condition of anonymity.

Other departures or earlier-than-planned retirements include Robert Dohner, an Asia specialist who led the push for China to allow the yuan to strengthen; Aimen Mir, deputy assistant secretary for investment security overseeing work on the CFIUS; John Weeks, head of the global economics office; and Ben Cushman, a Mandarin speaker.

All of those officials either declined to comment or did not respond to inquiries.

“For those who had spent their careers advocating the virtues of openness and integration and collaboration, the trajectory of policy under this administration probably made it more challenging for them,” said Sheets, Malpass’s predecessor in the Obama administration.

One of the unit’s most important functions is running CFIUS, the committee that reviews foreign acquisitions for any national security issues. The administration is bringing in a dozen new hires to fulfill Trump’s promise to beef up CFIUS. But with the departures factored in, it’s unclear if this increased headcount really represents a genuine expansion. Fortunately, Chinese investments in the US have already plunged this year.

China


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