January 10, 2024

Warren, Jayapal Raise Concerns about Commerce Department Tasking Wall Street Financiers with Allocating $39 Billion in CHIPS Semiconductor Funding

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.”

Text of Letter (PDF)

Washington, D.C.  – U.S. Senator Elizabeth Warren (D-Mass.) and U.S. Representative Pramila Jayapal (D-Wash.) 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. 

Senator Warren has led fights to ensure CHIPS funding is distributed equitably and to close the revolving door between government and private industry:

  • In December 2023, Senator Warren sent letters to three crypto giants: the Blockchain Association, Coin Center, and Coinbase, asking each of these organizations about their use of the revolving door to undermine efforts to rein in crypto’s use in terrorist financing. The letters come as a troubling report found that crypto interests are abusing the revolving door and employing a “small army” of former defense, national security, and law enforcement officials to undermine bipartisan efforts in Congress and the Biden administration to address the role of crypto in financing Hamas and other terrorist organizations. 
  • In September 2023, Senator Warren and Representative Japayal sent a letter to Daniel Werfel, Commissioner of the Internal Revenue Service (IRS), following the release of a troubling report from the Treasury Inspector General for Tax Administration on conflict-of-interest issues at the IRS, calling on Commissioner Werfel to take additional action to address the abuse of the revolving door between giant accounting firms and the IRS. 
  • In May 2023, Senator Warren released a 22-page investigative report: Big Tech’s Big Con: Rigging Digital Trade Rules to Block Antitrust Regulation. The investigation, based on a review of previously undisclosed emails, reveals that Big Tech is using its revolving door hires to gain backdoor access to key United States Trade Representative and Commerce Department officials, undermining the Biden Administration’s promises to end rigged trade deals and protect workers, consumers, and the environment. 
  • In February 2023, Senators Warren, Tammy Baldwin (D-Wisc.), Bernie Sanders (I-Vt.), Ed Markey (D-Mass.), and Representatives Sean Casten (D-Ill.), Bill Foster (D-Ill.), Jayapal, and Jamaal Bowman (D-N.Y.) sent a letter to Michael Schmidt, Director of the CHIPS Program Office, calling on Commerce to use its full authority to prevent funds from CHIPS and Science Act from being used to directly or indirectly subsidize corporate stock buybacks.
  • In October 2022, Senator Warren and Representative Jayapal sent a letter to Secretary Raimondo underscoring the dangers of Big Tech’s digital trade agenda, following up on a letter the lawmakers sent to Secretary Raimondo in July 2022 requesting additional information about the revolving door between Commerce and Big Tech and its potential impact on global digital trade rules.
  • In October 2022, Senators Warren, Baldwin, Chris Van Hollen (D-Md.) and Representatives Casten, Bowman, Jayapal, and Foster sent a letter to Secretary Raimondo, urging the Commerce Department to strengthen and enforce critical protections against the abuse of funds provided CHIPS Act for stock buybacks and promising continued Congressional oversight over the Department’s implementation of its commitments. 
  • In September 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren raised concerns about the need to protect CHIPS Act funds from being used by semiconductor companies to line the pockets of corporate executives instead of investing in strengthening supply chains, creating good union jobs, and bringing down prices for consumers. 
  • In July 2022, Senator Warren and Representative Jayapal sent a letter to Secretary Raimondo raising questions about the revolving door between the Department of Commerce and Big Tech companies, and its potential impact on global digital trade rules.
  • In June 2022, Senators Warren and Sanders and Representative Casten sent a letter to congressional conferees stressing the importance of strong guardrails to ensure that funding for the CHIPS Act is invested in workers and communities as intended, instead of enriching corporate executives.
  • In June 2022, Senator Warren and Representatives Katie Porter (D-Calif.) and Brad Sherman (D-Calif.) sent a letter to Richard K. Delmar, Acting Treasury Department Inspector General, J. Russell George, Treasury Inspector General for Tax Administration, and Andrew Katsaros, Acting Inspector General at the Federal Trade Commission, regarding troubling reports of Intuit's abuse of the revolving door and the company's hiring of former federal regulators and influence-peddlers to defend its shady business practices.
  • In February 2022, Senator Warren and Representative Jayapal sent a letter to the Acting Inspector General of the Department of Treasury and the Treasury Inspector General for Tax Administration, calling on them to open an investigation into the unethical revolving door between the world’s largest accounting firms and the Treasury Department and IRS. 
  • Senator Warren and Representative Jayapal’s Anti-Corruption and Public Integrity Act, the most ambitious anti-corruption legislation since Watergate, would outlaw corrupt revolving-door schemes so that public servants are serving the public—not the financial interests of themselves or giant corporations.