What have you always wondered about the economy? Tell us

U.S. looks closer at sovereign funds

Jill Barshay Feb 12, 2008
HTML EMBED:
COPY

U.S. looks closer at sovereign funds

Jill Barshay Feb 12, 2008
HTML EMBED:
COPY

TEXT OF STORY

Scott Jagow: We’ve talked a lot about how money from foreign governments is pouring into Wall Street banks. These sovereign wealth funds have bought up stakes in names like Morgan Stanley and Citigroup. Those banks certainly needed the money after their indiscretions in the mortgage market. But now, regulators in Washington want to take a closer look at what’s going on here. More from Jill Barshay.


Jill Barshay: Sovereign wealth funds have invested over $44 billion in U.S. financial and banking concerns since 2006.

Karen Shaw Petrou is a managing partner at Federal Financial Analytics in Washington, D.C. She says each of these foreign investments is usually just under 10 percent of a company’s total market value. That avoids U.S. government red tape — like having to get regulatory approval or filing investment reports.

Karen Shaw Petrou: They structure them at 9.99999.

Petrou says the Treasury Department is considering lowering that threshold to 5 percent. Another proposal would require foreign governments to invest through U.S. money managers.

Petrou: It would be like putting your money in the hands of one of the big brokerage firms. You don’t have the direct control over whether or not money goes into Bank of America.

The Senate Banking committee is expected to hear from Treasury Secretary Henry Paulson this week.

I’m Jill Barshay for Marketplace.

Marketplace is on a mission.

We believe Main Street matters as much as Wall Street, economic news is made relevant and real through human stories, and a touch of humor helps enliven topics you might typically find…well, dull.

Through the signature style that only Marketplace can deliver, we’re on a mission to raise the economic intelligence of the country—but we don’t do it alone. We count on listeners and readers like you to keep this public service free and accessible to all. Will you become a partner in our mission today?

Your donation is critical to the future of public service journalism. Support our work today – for as little as $5 – and help us keep making people smarter.