Sovereign Funds Agree To Be Good, Or Not To Be Bad

After months of haggling with governments in the US and Europe along with IMF officials. the world’s largest sovereign funds have agreed that their investments in banks and corporations will not be a veiled attempt to take over the American government.

According to The Wall Street Journal an important goal was to assure recipient countries that the funds "act from commercial motive rather than other motives."

Holding a gun to the heads of the funds may not be advantageous. Sovereign funds are quickly becoming the investors of last resort for troubled financial companies. Too many restrictions on those investments could make the capital sources simply walk away and put their cash in less restrictive markets. Most emerging countries do not seem to have qualms about sovereign capital influencing their governments. In some cases that is because they have little government at all.

The new rules have a perverse aspect to them. They are based on the idea that people like Carl Icahn do not lobby the US government to enhance the value of their holdings by influencing legislation or regulation. Nelson Peltz has never given a dime to an election campaign. Ditto the head of all the large hedge funds and investment banks.

The pockets of candidates are filled with gold from Wall St.

The argument for regulating sovereign funds is that is it in the "national interest" to keep key assets out of overseas hands.

Better to let robber barons have less competition to buy companies. Their only interest is the national good.

Douglas A. McIntyre