Opponents of Bush's Bill Play the Xenophobia Card

The foreign devil is loose in Washington.

Rep. John D. Dingell, D-Mich., chairman of the House Energy and Commerce Committee, was one of the first to sound the alarm. On his way out of a White House meeting with President Bush, he warned that the administration's banking bill would turn control of large chunks of the U.S. financial system over to foreigners.

"Foreign concerns would be able to own banks," he warned in grave tones. "The Soviet Union would be able to own a U.S. bank. We have to ask, would it be in the public interest if Saddam Hussein or the Chinese government were able to own a U.S. bank?"

Rep. Jim Leach of Iowa, a senior Republican on the banking committee with close ties to the President, raised similar concerns. The Bush bill, he said, "is an open invitation for every foreign enterprise to buy into American banks," including such notables as Toyota and Nissan.

A Fait Accompli

In fact, foreign interests already own American banks. Foreign banks owned by diversified companies can branch into the United States or buy American banks, and almost anyone cany buy a thrift directly.

But in the high-stakes battle over the administration's proposal to overhaul the U.S. banking system, lawmakers are seizing on every weapon at their disposal. And the foreign devil is a formidable weapon indeed.

"Foreign anything is an easy target these days," said one bank industry lawyer who represents foreign interests. "These guys have very little support."

"This is a populist and isolationist country," said Karen Shaw, president of the Institute for Strategy Development. The Japanese in particular are convenient targets, she said.

Saddam Savings and Loan?

But singling out foreign villains like Saddam Hussein "is fundamentally unfair," she said. "I'm not aware that he's applied to buy a bank."

Even if he had, she said, "we still have something called the Change in Bank Control Act," which presumably would disqualify him.

The argument works in reverse, too. Treasury Secretary Nicholas Brady cited dominance of foreign institutions in the rankings of top banks as evidence that the administration's bill is needed.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.