Democrats Question Semiconductor Program Ties to Wall Street

Two Democratic lawmakers on Tuesday expressed concerns about ex-Wall Street financiers overseeing the Commerce Department’s distribution of $39 billion in grants to the semiconductor industry, saying the staffing raised questions about the creation and abuse of a revolving door between government and industry.

In a letter to the Commerce Department, Senator Elizabeth Warren of Massachusetts and Representative Pramila Jayapal of Washington criticized the departments’ decision to staff a new office overseeing grants to the chip industry with former employees of Blackstone, Goldman Sachs, KKR and McKinsey & Company.

The lawmakers said the staffing decisions risked an outcome where staff members could favor past or future employers and spend taxpayer money “on industry wish-lists, and not in the public interest.”

Commerce officials have rejected the characterization, describing the more than 200-person team they have built to review chip industry applications as coming from diverse backgrounds including investing, industry analysis, engineering and project management. In a statement, a Commerce Department representative said the agency had received the letter and would respond through 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 obtaining some of the funding, and it is up to the Commerce Department to determine which of the projects deserve financing. Biden officials have said they will judge applications based on their ability to enhance American manufacturing capacity and national security, as well as benefit local communities.