Democratic Massachusetts Sen. Elizabeth Warren slammed a new Biden administration Department of Defense (DoD) Office Sunday, calling it “too cozy” with private investment firms.
Warren sent a letter to the Under Secretary of Defense for Research and Engineering, Heidi Shyu, who sits on the advisory council of the DoD Office of Strategic Capital (OSC), claiming that the OSC lacks the proper guardrails to prevent conflicts of interest, according to The Hill. The OSC was created in December 2022 by the Biden administration to “connect companies developing critical technologies vital to national security with capital,” such as private investment firms.
“I write regarding my concerns that the Department lacks the safeguards necessary to prevent conflicts of interest in the Office of Strategic Capital,” Warren said in the letter. “While I understand that one of the objectives of OSC is to ‘improve the government’s relationship with the venture community,’ I am concerned that this is resulting in a conflation of interests that creates clear conflicts.”
The OSC aims to facilitate capital investments in technologies that the DoD sees as important for the defense of the country.
“We are in a global competition for leadership in critical technologies, and the Office of Strategic Capital will help us win that competition and build enduring national security advantages,” Secretary of Defense Lloyd Austin said in a DoD announcement. “By working with the private capital markets and by partnering with our federal colleagues, OSC will address investment gaps and add a new tool to the Department’s investment toolbox.”
As evidence for the close relationship, Warren points to the director of the OSC urging government intervention in the run on Silicon Valley Bank (SVB), with the director sending an email saying that “many of the small businesses affected by the SVB failure are not only organizations that have worked alongside us, but also employ close friends,” according to the letter.
SVB Financial Group filed Chapter 11 bankruptcy in March after SVB underwent the biggest bank run since the Washington Mutual failure in 2008. The bank was then taken over by federal regulators, with the Federal Reserve intervening to insure depositors.
The SVB failure triggered a string of bank failures, including Signature Bank and First Republic Bank. There has since been a bipartisan effort to create greater regulations for banks to address the causes of the string of collapses, with a proposal to punish failed bank executives.
Warren’s office and the OSC did not immediately respond to a request to comment from the Daily Caller News Foundation.
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