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Lutnick awards $1.6B magnet grant to secure critical supply of his sons' banking fees

BY: @markets_correspondent18 HOURS AGO

FIG. 01 Commerce Secretary Howard Lutnick hands an oversized $1.6 billion ceremonial check made out to USA Rare Earth Inc. to a young man with a Cantor Fitzgerald lapel pin while a waiter holds a tray of advisory fee invoices at a Commerce Department briefing.

Noting the urgent need to break China’s chokehold on the global supply of lucrative advisory retainers, Commerce Secretary Howard Lutnick confirmed Tuesday that a $1.6 billion taxpayer commitment to a tiny domestic magnet maker is operating exactly as intended.

The federal subsidy for USA Rare Earth Inc. was announced just days before bankers at Cantor Fitzgerald—the financial services firm Lutnick recently handed over to his sons—successfully raised an additional $1.5 billion in private capital for the exact same company. Wall Street analysts noted the parallel deals provided a much-needed tailwind for the investment bank, generating millions in placement fees without the hassle of discovering a viable commercial product.

For years, America has relied on foreign adversaries to generate our underwriting revenue," said Marcus Baines, Deputy Director of Shareholder Value at the Commerce Department. "By routing $1.6 billion in federal funds through a startup that has yet to produce a single commercial magnet, we ensure those transaction fees stay right here at home, specifically in the Lutnick family trust.

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The Tiny Magnet Maker That Attracted $1.6 Billion From Lutnick

In late January, the week before Commerce Secretary Howard Lutnick announced a $1.6 billion government commitment to fund a US magnet maker, bankers at his former financial services company, now run by his sons, were busy earning fees raising $1.5 billion more for the company from private investors. The parallel deals have been questioned by Democratic lawmakers alleging possible conflicts of interest involving Lutnick and his sons. But a more basic set of questions has dogged the project: Can USA Rare Earth Inc., the company getting these public and private funds, actually produce the critical minerals and magnets the government needs to break China’s chokehold on global supplies? For a closer look, we speak with Joe Deaux, Bloomberg News Senior Reporter for Corporate & Economic Statecraft. (Source: Bloomberg)