Commerce Secretary Howard Lutnick is creating an “investment accelerator” within his department, targeting major corporations, including Intel Corp. (NASDAQ:INTC) and Lockheed Martin Corp. (NYSE:LMT).
According to The New York Times report, the fund, led by former Morgan Stanley (NYSE:MS) banker Michael Grimes, aims to secure government equity stakes in exchange for federal support.
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The initiative uses CHIPS Act funding and billions pledged by Japan and South Korea through trade deals to establish what Lutnick calls a “national and economic security fund.”
Intel Deal Sparks Corporate Concerns
Lutnick’s extraction of equity from Intel for federal funds surprised corporate leaders who previously viewed him as an ally. “America should have shares because it’s just fair,” the former Cantor Fitzgerald CEO told Intel’s leadership.
The approach targets defense and shipbuilding companies, with Lockheed Martin among potential targets for similar government equity arrangements.
Wall Street Executives Express Wariness
Corporate leaders are becoming more cautious about seeking government support, fearing they'll face demands for tough concessions, as seen with Intel. Harvard economist Greg Mankiw criticized these tactics, describing them as “a kind of shakedown” and comparing them to mob-style extortion.
Consultants who once viewed Lutnick as their primary link to the administration are now expressing concerns over his aggressive methods.
Market Impact and Resistance
The strategy creates corporate uncertainty despite aligning with Trump‘s deal-making approach. Customs officials blocked Lutnick’s new External Revenue Service proposal, limiting his tariff control expansion.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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