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Treasury Secretary Scott Bessent has hired veteran Wall Street economist David Zervos, the longtime chief market strategist at Jefferies, as a counselor in the Treasury Department. Zervos was a CNBC contributor. Bessent announced the hire Monday in a statement obtained first by CNBC. Zervos will serve in a broad advisory capacity and is expected to begin immediately. He has backed Bessent's recent decision to increase buybacks of some long-term Treasury debt and has called for lower interest rates from the Federal Reserve. Zervos in a brief interview called himself a "Wall Street geek" and said he was excited for his third stint in government. Bessent "has done an incredible job in this administration at guiding the economy through a lot of tumultuous periods," Zervos said. "Whether it's trade, whether it's war, he's stepped up," he said of Bessent. Zervos will add intellectual firepower to the Treasury after a series of staff departures that have drawn some attention. Seven of the department's 16 Senate-confirmed appointees had left the department as of mid-August, the Washington Sun reported. Bessent is on his third chief of staff since becoming Treasury secretary in January 2025. Fellow Wall Street economist Joseph Lavorgna of SMBC Nikko served in a similar role as counselor to Bessent before leaving in March. The position doesn't require Senate confirmation. Bessent handles an especially broad portfolio for a Treasury secretary. He has been effectively President Donald Trump's top negotiator on China and has been closely involved in policy debates about artificial intelligence, although Trump on Friday said Bessent would not add a role as the administration's top AI advisor. Zervos was considered by Trump to run the Federal Reserve, though the president ultimately chose Kevin Warsh for the job in January. Zervos has worked at Jefferies, a New York-based investment bank, since 2010. Zervos has a doctorate in economics and has worked twice for the Fed. The first time was at the start of his career, in the early 1990s, when he did technical economics and interest rate research. He left for the private sector and returned to the Fed in 2009 as a visiting advisor in the wake of the financial crisis. Warsh was a governor at the Fed then, though it isn't clear if he and Zervos worked together directly at the time. Zervos will serve as a special government employee, he said in an email to his clients. That status allows him to avoid some often-onerous divestiture requirements that come with other federal appointments, but it restricts how long he can hold the position. Zervos said he expects his term to end in April 2027. Zervos said last year he believed interest rates should be "much lower." Since Warsh took the job, Zervos has said he thinks Warsh can make room for lower interest rates by cutting the Fed's balance sheet. Those reductions are one of Warsh's top priorities. The Fed raised interest rates earlier this month for the first time since 2023. That decision prompted frustration from some economists in the Trump administration, but Bessent has been more circumspect. He said Sunday in an appearance on Fox News that the Fed "should have an open mind" about how to manage the economy. Bessent has intervened in Treasury markets as interest rates have continued to rise. The 10-year Treasury hit 5.2% on Friday, a level last seen in 2007, powered by a strong economy, competition for capital from the artificial intelligence build-out and concerns about inflation as the Iran war continues. Zervos, in a CNBC appearance last month, backed Bessent's decision to increase buybacks of some long-term Treasury debt, a move that may have eased pressure on some Treasury yields. Some on Wall Street had criticized the buybacks, but Zervos said he supported them. "I don't see how you could fight this when the firepower and the cards are all sitting in the Treasury Department," Zervos said.
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