Nicholas Rummell says to expect "Sovereign funds to get more attention in D.C." (Financial Week's "After the bell " column, January 11, 2008).
Last year Congress reformed the process the U.S. uses to review foreign direct investments for national security implications (Foreign Investment and National Security Act of 2007 - FINSA). Look at my CFIUS archive for links to this history of this, and to analysis of FINSA's implications (CFIUS stands for Committee on Foreign Investment in the U.S. - the interagency committee that reviews investments). I posted here on implementing the reforms: What's left on CFIUS Reform? (Jan 6).
Rummell says to expect:
- Much of his note discusses the potential application of CFIUS to sovereign wealth fund investments in investment banks. "The committee typically examines companies involved in defense or infrastructure where there could be a national security threat, but with banks such as Citigroup and Merrill Lynch seeking additional capital from sovereign wealth funds, it could soon be probing Wall Street bailouts as well. New guidance expected in the spring will delineate whether banks also fall under CFIUS’ jurisdiction."
- "Meantime, Sen. Christopher Dodd (D-Conn.) plans to hold hearings on the role of sovereign funds in U.S. capital markets, a staffer on his banking committee said."
- "...the Government Accountability Office is examining sovereign funds to determine the size, location and types of investments such funds make, as well as whether applicable laws and regulations, including CFIUS requirements, are adequate to protect U.S. market stability."
Comments