Wall Street Bankers Seize Pentagon Levers

Aerial view of the Pentagon surrounded by roads and parking lots

Congress is waking up to a Pentagon money machine that can move billions with Wall Street-style tactics and almost no sunlight.

Story Snapshot

Deputy Defense Secretary Steve Feinberg quietly stood up a powerful Economic Defense Unit (EDU) inside the Pentagon to fuse “economic leverage” with military planning.
The EDU has a proposed $593 million research and development budget for 2027 and may help steer up to $200 billion over three years into defense-linked deals.^[1]^[2]^[3]
Reports say the Pentagon is recruiting a 30-person team of investment bankers and private equity insiders, raising conflict-of-interest and oversight concerns.^[1]^[2]^[3]^[7]
Lawmakers now want tighter guardrails so this new money-and-power hub cannot become a shadow sovereign wealth fund inside the Defense Department.^[3]

New Pentagon Money Unit Puts Wall Street Inside National Defense

Deputy Defense Secretary Steve Feinberg signed a two-page memo this April that formally created the Economic Defense Unit, a new hub that will mesh economic tools directly into United States war planning.^[1] The memo says the director of this unit will report straight to Feinberg as his top adviser on “economic competition,” giving the office unusual reach across the Defense Department.^[1] In plain language, the Pentagon is building a command center where money becomes a weapon, not just a support function.

The Feinberg directive defines economic competition as the “coordinated and deliberate” use of tools like capital, trade rules, tariffs, export controls, and regulations to weaken enemies and boost American advantage.^[1] That means the unit will not only advise on weapons and troops but also on how to pressure adversaries by shaping markets, supply chains, and investment flows.^[1]^[2] It will run exercises, crunch data, and model how sanctions, subsidies, and deals change the balance of power during crises and conflict.^[1]^[2]

Big Budgets, Bigger Questions: How Much Power Will EDU Control?

The Pentagon’s fiscal year 2027 budget request includes about $593 million in research, development, testing, and evaluation funding for the Economic Defense Unit, with earlier seed money already set aside in the 2026 plan.^[1] Separate reporting says pitch materials sent to recruits describe a unit that could help steer up to $200 billion over three years into strategic defense deals touching areas like undersea cables, minerals, drones, satellites, and energy.^[2]^[3] That scale begins to look like a shadow sovereign wealth fund housed inside the Defense Department.^[3]

The roots of this project go back to 2025, when the Senate Armed Services Committee called for an Economic Defense Unit to coordinate economic competition work.^[2] War Secretary Pete Hegseth then tied the idea into a larger overhaul of the acquisition system, giving the future EDU a role in building a “playbook” for deploying capital.^[4]^[5] Under that plan, the director would back the Office of the Under Secretary for Acquisition and Sustainment by using grants, loans, options, purchase commitments, and investments to speed up critical weapons and industrial capacity.^[4]^[5]

Wall Street Recruits and Weak Oversight Stoke Fears of Regulatory Capture

Semafor and other outlets report that the Pentagon is recruiting a roughly 30-person team of bankers from firms like Goldman Sachs and JPMorgan to staff the Economic Defense Unit’s investment cells.^[2]^[3]^[7] Critics warn this structure invites regulatory capture, where the same Wall Street and private equity circles that stand to profit are also shaping which companies and sectors get backed with taxpayer-linked capital.^[3] The public memo launching the unit did not detail any special ethics rules, firewalls, or conflict-of-interest limits for these financial hires.^[1]^[3]

Compounding concerns, Feinberg’s founding memo did not name a director, even though a Defense conference agenda later identified George Kollitides in that role.^[1] That gap fed a sense that the unit was being wired up behind closed doors, with Congress and the public learning key details only through leaks and event listings.^[1]^[3] The Pentagon also declined to answer detailed questions from reporters about staffing and timelines, leaving the impression of a powerful new office moving ahead without a clear communication plan or public guardrails.^[1]^[3]

Congress Pushes Back: Guardrails Before the Money Flows

Policy experts across the spectrum agree that America must beat China and other rivals in the economic arena, not just on the battlefield, and note that the Economic Defense Unit fits a larger trend of using finance, supply chains, and public‑private deals as tools of statecraft.^[5]^[6]^[7]^[8] Think tanks that favor a tougher line on Beijing praise the concept as a way to fight in the “gray zone,” where adversaries use loans, minerals, and infrastructure projects to gain leverage without firing shots.^[5]^[8] They argue the United States cannot ignore these tactics and must answer with its own smart economic moves.^[2]^[5]^[8]

Congress seeks tighter oversight as DOD moves to institutionalize Economic Defense Unit https://t.co/KTZEkVoMlq

— Inside Defense (@insidedefense) June 12, 2026

Liberty‑minded analysts and many in Congress do not oppose economic strength but warn that this new unit concentrates power over capital inside the executive branch with fuzzy legal limits.^[3]^[6]^[7] The Office of Strategic Capital already has clear authority from Congress to make credit-based investments to support key industries, but experts say there is no equally clear statute that lets the Education Defense Unit take equity stakes in private firms.^[3] Lawmakers are now weighing audits, hearings, and tighter reporting rules to ensure this “financial arsenal” serves national security, not well‑connected insiders.^[3]^[6]