Two Democratic lawmakers expressed concern Tuesday about the ex-Wall Street financiers overseeing the distribution of the Commerce Department’s $39 billion grant to the semiconductor industry, saying the staffing created a revolving door between the government and the industry. Questions have been raised about manufacturing and misuse.
In a letter to the Commerce Department, Senator Elizabeth Warren of Massachusetts and Representative Pramila Jayapal of Washington called for a new office to be staffed with former employees of Blackstone, Goldman Sachs, KKR and McKinsey & Company to oversee grants to the chip industry. Criticized the department’s decision.
The lawmakers said staffing decisions risk an outcome where staff members could favor past or future employers and spend taxpayer money “on industry wish-lists, not in the public interest.”
Commerce officials have rejected that characterization, describing the more than 200-person team created to review chip industry applications as coming from diverse backgrounds including investing, industry analysis, engineering and project management. In a statement, a representative of the Commerce Department said the agency had received the letter and would respond through the appropriate channels.
The criticism highlights the stakes for the Biden administration as it begins distributing billions of dollars to try to rebuild the country’s chip manufacturing capacity.
More than 570 companies and organizations have expressed interest in receiving some funding, and it is up to the Commerce Department to determine which projects are eligible for funding. Biden officials have said they will evaluate applications based on their ability to enhance U.S. manufacturing capacity and national security, as well as benefit local communities.
The department announced its first awards from the program in December and the second this month, both to chipmakers tied to military procurement. The total amount of those awards was less than $200 million, but the Commerce Department is expected to begin announcing larger grants to major chip manufacturing facilities in the coming months that could amount to billions of dollars.
Given the amount of taxpayers’ money at stake, scrutiny has focused on the individuals who will consider the applications. The director of the CHIPS office, Michael Schmidt, is a former official of the Treasury Department and New York State Government. Other key staff members extensive experience In the financial industry, Chief Investment Officer Todd Fisher, a longtime employee of global investment firm KKR, is also involved.
Gina Raimondo, the Secretary of Commerce, also had a background in venture capital, running her own investment firm before serving as Governor of Rhode Island.
The Commerce Department has said it will take a tough stance on applications and that its awards will depend solely on the strength of the applications and their ability to advance US economic and national security interests. Supporters have said staffing the team with investment analysts would give the government the expertise needed to analyze chip companies’ complex business proposals.
“Here at the Commerce Department we basically have to be good stewards of taxpayers’ money and only provide funding to projects that need this money to encourage investment,” Ms. Raimondo told reporters in August.
some critics even slammed The Biden administration has been accused of imposing too many non-financial requirements on CHIPS applicants, such as the requirement to provide affordable child care for their employees.
But in an interview, Ms. Warren said the Commerce Department had created a potential ethics issue “unlike I’ve ever seen before” by “deciding to appoint one of the most powerful companies on Wall Street.”
“This creates an opportunity for a serious conflict of interest,” Ms Warren said.
He said, “A handful of employees may be using the Wall Street revolving door to provide unfair benefits to their former and potential future employers in a way that is not in the public interest.” “They can also benefit current clients of those employers, or use their position to build relationships and business opportunities with future clients.”
The letter from Ms. Warren and Ms. Jayapal requested more information about the ethics rules for CHIPS office employees, including whether employees filed personal financial disclosure forms, and whether the department followed suit. Establish no restrictions on where employees can work after leaving the government. ,
Ms Warren and Ms Raimondo have faced off before, including at the Commerce Department Meetings with big technology companies, Ms Warren has done it before raised concerns About the ability to use federal CHIPS grants to enrich chip industry executives through stock buybacks or otherwise, and to set stronger limits on the types of jobs former executives can take across government after leaving public service. Proposed law.
Responding to Ms. Warren’s previous inquiry about the CHIPS program in a letter last February, the Commerce Department said it “prioritized ethics in the appointment of staff to CHIPS offices.” The department said employees will be screened for potential conflicts of interest and will receive mandatory ethics training.