Nerve Center

Malpass's division is the nerve center within Treasury on trade policy and oversees the Committee for Foreign Investment in the U.S., Trump's key tool for limiting Chinese investments into American technology. The attrition complicates Treasury's efforts to carry out Trump's economic agenda as the U.S. levies new tariffs against China and allies in Europe, and the president threatens to tear up a longstanding NAFTA agreement with neighbors Canada and Mexico.The Trump administration's hiring freeze at federal agencies has compounded the impact of the departures, contributing to a shrinking headcount in the division, according to two people familiar with the matter.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.”Some paint a different picture of Malpass' leadership, with a current Treasury official saying he is open to new ideas and input from civil servants.Among the staff to depart was Mark Sobel, a 40-year veteran at Treasury, who sped up his plans to retire from his post as deputy assistant secretary for international monetary and financial policy, deciding to resign in April, according to three people familiar with his thinking. Sobel, 64, had risen to be part of a group of influential career officials who worked in administrations of both parties. Sobel declined to comment.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 IMF 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. |

Next Generation

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 administrationWhile Malpass' leadership style has grated on many Treasury officials, Mnuchin is seen as respectful of their expertise and a good listener, according to the six people. Mnuchin has repeatedly complimented Treasury career staff, an uncommon display of trust in an administration where the president has tweeted about his skepticism of the “deep state” of non-partisan civil servants.The department is expected to hire at least a dozen people for CFIUS, which is housed in Treasury's international affairs unit. CFIUS reviews foreign investments for national security risks and is expected to be revamped soon with a bipartisan bill in Congress.

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