Feb. 3 (UPI) — President Donald Trump on Monday ordered the creation of a government-owned sovereign wealth fund of financial assets, which he said possibly could be used to buy TikTok.
Trump designated Treasury Secretary Scott Bessent and Commerce secretary nominee Howard Lutnick to create and lead such a fund. The new fund would take approval from Congresses, which normally approves federal spending, Axios reported.
“It’s a very exciting event,” Trump said during the signing ceremony in the Oval Office. “We’re going to have a sovereign wealth fund, which we’ve never had. We have a lot of things that create wealth and you’re seeing that over the last two weeks, I think we’ve created more wealth.”
Details of the idea, which Trump mentioned during his 2024 presidential campaign, were not given, including where the money would come from. Funds usually include stocks, bonds and real estate, along with stakes in infrastructure and private equity.
“It will be a combination of liquid assets, assets that we have in this country as we work … to bring them out for the American people,” said Bessent, who on Monday was designated to also become acting director of the Consumer Products Financial Protection Bureau.
“The extraordinary size and scale of the U.S. government and the business it does with companies … should create value for American citizens. If we are going to buy 2 billion Covid vaccines, maybe we should have some warrants and some equity in these companies and have that grow for the help of the American people.”
The program could take up to one year to establish, Lutnick said.
Trump said funds could possibly be used to help take over TikTok, the social media app that purportedly is a possible data risk for users because of China’s influence over its parent company, Beijing-based ByteDance.
“TikTok — we’re going to be doing something, perhaps, with TikTok, and perhaps not, if we make the right deal we’ll do it, otherwise we won’t, but I have the right to do that,” Trump said. “And we might put that in the sovereign wealth fund, whatever will make. Or if we do a partnership with very wealthy people. A lot of options, but we could put that as an example of the fund.”
Trump signed an executive order on his first day in office that delayed the enforcement by 75 days of the law that required TikTok’s parent company in China to divest itself of the app.
Funds elsewhere
Other nations, mainly oil-rich ones, have these kinds of funds.
Norway has the largest sovereign wealth fund in the world with a net worth of approximately $325,000 for each of the 5.5 million Norwegian citizens. Oil revenues are reinvested in assets, including stocks, with money from the funds nearly 20% of its annual budget.
Other countries with hefty sovereign wealth funds are China, Saudi Arabia, Australia, Iran and Russia.
Alaska and Texas, which have vast oil reserves, have state-run wealth funds. Alaska distributes annual dividends to eligible Alaska residents from its fund worth $79.6 billion. Texas, with $56 billion in assets, distributes money to public K-12.
Without proper safeguards, these funds can turn into “conduits of corruption, money laundering, and other illicit activities,” according to a study last year by the Carnegie Endowment for International Peace.
They funds typically come outside the central bank’s or finance minister’s purview to keep it insulated from politics, per a recent analysis.
