Members of CHIPS Investment Team Passed Through Revolving Door Between Government and Wall Street, Risking Misuse of Taxpayer Dollars
“Instead of building a broad-based team of experts from different sectors of government and the private sector, the Department has ‘been quietly building a small team of elite Wall Street financiers’ to dole out (CHIPS) funds.”
Washington, D.C. – U.S. Representative Pramila Jayapal (D-Wash.) and U.S. Senator Elizabeth Warren (D-Mass.) sent a letter to Secretary of Commerce Gina Raimondo, expressing concerns about the Department of Commerce’s (Commerce) reliance on a small team of Wall Street financiers to help allocate $39 billion in CHIPS and Science Act taxpayer-funded manufacturing and R&D subsidies. The lawmakers are seeking answers about possible abuses of the revolving door between government and Wall Street that could threaten the fair distribution of taxpayer funds and the goals of the CHIPS and Science Act.
“Your decision to staff the (CHIPS) Investment Team with ‘a handful of bankers’ raises questions about the abuse of the revolving door between government service and the private sector. It also creates a risk of this key panel misusing taxpayer dollars by directly or indirectly favoring previous — or potentially future — employers or colleagues as the panel divvies up billions in taxpayer funds designed to help the domestic semiconductor industry,” wrote the lawmakers.
Congress passed the bipartisan CHIPS and Science Act to address the supply chain disruption and subsequent economic impacts caused by the COVID-19 pandemic. The legislation aims to boost domestic research and manufacturing of semiconductors, and includes $39 billion in subsidies for chip manufacturing and research and development. Commerce’s CHIPS Program Office and Investment Office are charged with determining how the $39 billion in subsidies will be allocated, including selecting winners and losers among over 450 entities that are seeking government funding for manufacturing capabilities.
But instead of building a broad-based team of experts from different sectors of government and the private sector, the Department has “been quietly building a small team of elite Wall Street financiers” to dole out the funds. The team includes a former partner at McKinsey, a former private-equity Blackstone employee, and former Goldman Sachs and KKR executives — all companies that have been implicated in wrongdoing ranging from foreign bribery to child labor.
“Indeed, ‘the recruitment of an entire team of private-sector professionals is unprecedented’ in such a large and expensive program. While we recognize that private sector perspectives can contribute valuable expertise, without strong oversight, clear guardrails, and the inclusion of other perspectives, staffers using the Wall Street revolving door can also provide their former — and potentially future — employers and colleagues an undue advantage in proposal decisions. Inadequate consideration of these conflicts of interest risks an outcome in which CHIPS funding is disproportionately spent based on industry wish-lists, and not in the public interest,” continued the lawmakers.
Given these concerns, the lawmakers are seeking answers to a detailed set of questions about how Commerce and the CHIPS Program Office plan to maintain objectivity and prevent revolving door abuses by February 8, 2024.
The full text of the letter can be found here.