The World Bank Is Remaking Itself as a Creature of Wall Street

Jim Yong Kim, the World Bank’s president, is
trying to revitalize a hidebound institution.
But his embrace of Wall Street is controversial.

.. provides cash to companies in exchange for equity stakes, the World Bank currently drums up more than $7 billion a year from the private sector to invest in ventures in the developing world. Mr. Kim wants that figure to increase eventually to $30 billion.
.. The World Bank promised to protect investors against some losses.
.. those benefiting from the World Bank’s lending practices were “the people who fly in on a first-class ticket to give advice to governments.”
.. The argument was that growing investment flows into developing countries rendered World Bank lending mostly superfluous.

.. Last year, the World Bank dispensed $61 billion in loans and investments. By contrast, investors now inject more than $1 trillion a year into emerging markets

.. In effect, he was pitching the bank’s services as a middleman, ready to back projects with guarantees and other incentives. No longer could the World Bank be the sole provider of loans, which, he said, are “crowding out” the private sector.

.. the World Bank economists whose pay is tied to how many loans they churn out

.. “One of the most difficult things to do in a large bureaucracy is to change incentives,

.. “And if you have a large bureaucracy full of economists it is especially hard, because it turns out that economists really hate it when you change the incentives.”

.. On Wednesday, the bank’s top economist, Paul Romer, abruptly resigned.

.. His end came after he claimed, in an interview with The Wall Street Journal, that the World Bank’s closely-watched report on business conditions in different countries had been altered for political reasons.

.. the bank tends to see private sector solutions — those involving the profit motive — as morally questionable.

.. World Bank staffers are used to talking to governments, and now they have to leverage the private sector? It is a different skill set, and flexibility is not the hallmark of development institutions.”

.. “He had to work against his own incentives,” Mr. Kim said, referring to the bank’s practice of rewarding staff for loans. “And that is part of the institutional problem here.”

.. “He has pursued a strategy of making himself popular in Davos by attacking the organization and its staff,” said Lant Pritchett, a retired World Bank executive. “It is this idea that his hand has been hampered by bureaucratic machinations. That may be accepted in Davos — but it’s completely false.”

.. His biggest coup was working with Ivanka Trump

.. They eventually settled in Muscatine, Iowa, where Mr. Kim was a high school quarterback before going on to Brown and securing advanced medical and anthropology degrees from Harvard.

Trump says he has nothing to fear from Flynn, then stokes new controversy with tweet

Trump’s lawyers have begged him not to tweet about Russia or the investigation, but the president said repeatedly Friday that he wanted to respond to the Flynn news, associates said.

Cobb has told others that he has been more successful than others at limiting Trump’s tweets because he talks to him frequently and reassures him

Meanwhile, an email written by a Flynn deputy that came to light Saturday suggests that many of Trump’s closest aides were informed that Flynn planned to discuss sanctions with the Russian ambassador before Flynn made a December phone call to Kislyak.

.. Burck said that Priebus “confronted General Flynn several times, including in front of others, on whether he had talked to Kislyak about sanctions and was consistently told he had not.”

.. Trump was in a buoyant mood as he crossed Manhattan on Saturday, bragging about his election win in Rust Belt states and the improving economy.

At several stops, he touted the Senate’s passage of the GOP tax bill and predicted that Democrats who voted against it would lose their next elections.

Trump’s stops included the palatial Upper East Side apartment of Steve Schwarzman, chairman of a global private-equity firm.

.. Trump also told the wealthy donors at the event that the legislation was for the middle class

 

Who Will Be Trump’s Pick to Lead the Fed? We Asked Experts to Rate the Odds

Ms. Yellen has a possibility of being renominated, according to this consensus, but it is only 22 percent; experts think that Kevin Warsh, a former Fed governor with deep Republican ties, has a slightly better chance at 23 percent.

.. The case for renominating Ms. Yellen is straightforward.

She has presided over four years of steady economic expansion and rising financial markets. She moved cautiously toward raising interest rates even though the economy seemed to be approaching full employment. By contrast, some more conservative contenders for the job have indicated they want to raise rates more quickly, which could endanger the economy as President Trump approaches midterm elections in 2018 and a potential re-election battle in 2020.

.. Moreover, as President Trump dabbles in making deals with Democrats, reappointing Ms. Yellen could serve as an expression of good faith to Democratic senators. As administration officials focus on tax legislation and other priorities on Capitol Hill, it might be helpful to them to nominate someone who might sail through confirmation, rather than demand a bruising, time-consuming battle.

.. The case against Ms. Yellen is similarly straightforward: She is a liberal economist in a government dominated by conservatives. She is a cerebral academic serving during the presidency of a bombastic businessman. And she is a staunch defender of the work the Fed and other bank regulators have done to try to limit risk in the financial system — including in a high-profile speech last month — amid an administration focused on deregulation.

Kevin Warsh: well connected, but with baggage

He has a law degree, but no advanced degree in economics.

.. Mr. Warsh has been a skeptic of the Fed’s efforts to boost the economy through quantitative easing and has advocated raising interest rates more quickly. He also has a regulatory philosophy more in line with the administration’s.

.. Mr. Warsh’s father-in-law is Ronald Lauder, of the Estée Lauder cosmetics fortune, a major Republican donor with longstanding ties to Mr. Trump.

.. If Mr. Warsh is nominated, expect significant blowback during the confirmation process from Democrats, who are likely to accuse the 47-year-old Mr. Warsh of being underqualified, of being responsible for the 2008 bank bailouts and inclined to regulate banks too lightly now, and of being too overtly political for the traditionally nonpartisan Fed chairmanship.

.. Democrats would be eager to criticize the administration for naming a recent top executive at Goldman Sachs to be the nation’s most powerful financial regulator. Some populist Republicans might join them.
.. Foremost among them are several of the names we would probably be hearing about if a conventional Republican president were in the White House
.. John B. Taylor is a respected economist at Stanford who worked in the George W. Bush administration and has been an influential voice among congressional Republicans who want to see the Fed bound by stricter rules governing its actions.

Glenn Hubbard was a top economic adviser to Mr. Bush who is dean of Columbia Business School.

Larry Lindsey was another top adviser to Mr. Bush and a former Fed governor with an economics doctorate from Harvard.

.. Their doctorates and affiliations with top universities may actually be downsides in an administration that has shown disdain for academic expertise.

.. other names has emerged in various reports, including the F.D.I.C. vice chairman Thomas Hoenig and John Allison

America’s Roster of Public Companies Is Shrinking Before Our Eyes

Gusher of private capital, IPO slump and merger boom cause listings to plunge; ‘There’s no great advantage’

With interest rates hovering near record lows, big investment funds seeking higher returns are showering private companies with cash. Companies also are leaving the stock market in near-record numbers through mergers and acquisitions.

 .. The U.S. is becoming “de-equitized,” putting some of the best investing prospects out of the reach of ordinary Americans. The stock market once offered a way for average investors to buy into the fastest-growing companies, helping spread the nation’s wealth. Since the financial crisis, the equity market has become bifurcated, with a private option available to select investors and a public one that is more of a last resort for companies.
.. The number of U.S.-listed companies has declined by more than 3,000 since peaking at 9,113 in 1997

.. “There’s no great advantage of being public,” says Jerry Davis, a professor at the University of Michigan’s Ross School of Business and author of “The Vanishing American Corporation.” “The dangers of being a public company are really evident.”Among them, Mr. Davis and others say: having an investor base that clamors for short-term stock gains and being forced to disclose information that could be useful to competitors.

.. “I thought the public markets were too harsh on companies that were creating something that doesn’t exist,” he says, citing the then-nascent cloud-computing industry. “It’s tough to answer every quarter for something when you don’t have all the answers because it’s still unfolding.”

.. Venture-capitalist Bill Gurley sees a bubble in the private markets. He predicts investors will lose significant amounts in many closely held companies valued at $1 billion or more, which currently stand at 154, according to Dow Jones VentureSource. “History would suggest that it’s a real possibility,” he says.