The Pentagon Buyout King

Stephen Feinberg, the Pentagon's second-ranking civilian official, who manages much of the military's trillion-dollar budget, recently sat down for his first on-the-record newspaper interview in nearly two decades, with The Wall Street Journal. His only other major media appearance in his long tenure at Cerberus Capital Management and across both Trump administrations was a 2008 interview with The New York Times, given amid criticism of Cerberus's debt-financed buyouts of Chrysler and General Motors. In the Journal interview, Feinberg acknowledged he would make mistakes and said they would be discussed when they occurred, framing this as part of urgent change.

The criticism of Feinberg's Pentagon tenure centers on his strategic decisions and on conflicts of interest involving his inner circle. Anonymous Defense Department skeptics, cited by the Prospect, described his approach as a "Wall Street playbook" better suited to extracting profits from bankrupt companies than running the U.S. military. Feinberg oversees the administration's investment units, which are staffed largely by former Cerberus executives and have bought equity in and lent heavily to military supply chain firms, several tied to the Trump family and other well-connected investors. One unit, originally created under the Biden administration to make low-interest loans for domestic defense production, is now involved in managing the U.S. Venezuela oil deal and has floated a $5 billion AI infrastructure loan with a new bank founded by Palmer Luckey. Feinberg also created the Economic Defense Unit and installed George Kollitides, a former Cerberus aide-de-camp, as its head.

According to ProPublica, the Defense Department awarded a no-bid contract worth many hundreds of millions of dollars to Alvarez & Marsal, a firm tied to Kollitides and Cerberus, to consult for the investment office he runs. The contract used an Other Transaction Authority, a fast-track vehicle that watchdogs have said leaves the government vulnerable to vendors and outside many procurement protections. When ProPublica asked about Kollitides's dual role, Alvarez & Marsal said he had stopped working there days earlier. Separately, the Prospect reported a Pentagon contract to McDermott Will & Schulte, outside counsel to Cerberus, whose attorney also manages Feinberg's irrevocable trust; that firm helped negotiate direct equity stakes in critical minerals companies. Policy experts have questioned whether such one-off deals can counter Chinese dominance in rare earths, and Cerberus has invested in Canada-based Torngat Metals, which has yet to build a mine.

The Pentagon has repeatedly described its ethics framework as "rigorous, multi-layered," but has not explained what it contains or addressed why conflicts have persisted. Democratic lawmakers have indicated they will pursue investigations of the Pentagon if they regain committee control, and Feinberg has said he intends to remain through the end of Trump's term.