Congressional Committee Warns of SWF Risks
February 8, 2008 Memri Economic Blog
Hat Tip-Margo I.
Members of congress, federal officials and academics warned yesterday that sovereign wealth funds owned by governments pose a risk for US national security. Linda Chatman Thomas, Director, Division of Enforcement, US Securities and Exchange Commission, told a congressional committee: “We are concerned that a government whose help we might seek controls the party that we are investigating. In this case, the extent of cooperation will be affected.”
Politicians are concerned that these rapidly-growing funds will be motivated by political rather than economic considerations, and they may take control of companies that are crucial for national security.
The SWFs, valued at $2 trillion, came recently under the limelight after infusing $20 billion in Citigroup and Merrill Lynch and another $40 billion in other financial institutions, including British and Swiss banks. They are projected to grow to $12 trillion by 2012, or one tenth of global assets. The topic will be debated by the ministers of finance of the G7 in Tokyo tomorrow. al-Sharq al-Awsat, February 8, 2008