The stimulus legislation signed Tuesday by President Obama restricts banks' hiring of foreign workers if they take money from the Troubled Asset Relief Program.
The provision, the Employ American Workers Act, was softened from an outright ban on hiring people with the H-1B visas that are granted to foreign professionals with specialized education. A related provision that would have required businesses taking Tarp funding to use the federal government's E-Verify system to vet the employment status of their workers also was eliminated.
Sens. Bernie Sanders, I-Vt., and Chuck Grassley, R-Iowa, the authors of the restriction on hiring foreigners, wanted companies that accept bailout funds to "make a good-faith effort" to hire U.S. citizens before looking abroad.
In a statement, Sen. Sanders said bailed-out banks must hire Americans for two years, unless they can prove they are not replacing laid-off Americans with foreigners.
"With thousands of financial services workers unemployed, it is absurd for banks to claim they can't find qualified American workers," he said. "While we are suffering through the worst economic crisis since the Great Depression, the very least we can do is to make sure that banks receiving a taxpayer bailout are not allowed to import cheaper labor from oversees while they are throwing American workers out on the street."
But immigration experts said the provision probably would altogether stop banks that have accepted Tarp funding from hiring someone with an H-1B visa.
"Ultimately, we are making things more difficult for American banks," said Austin T. Fragomen, the head of Fragomen, Del Rey, Bernsen & Loewy LLP, a New York immigration law firm. "You are giving them a lot of new hoops to jump through that competitors, both in the U.S. and abroad, don't have to face."
Eleanor Pelta, an immigration lawyer at Morgan Lewis & Bockius in Washington and the second vice president of the American Immigration Lawyers Association, said that 65,000 H-1B visas are granted annually, plus 20,000 visas for foreign nationals who get master's degrees in a specific field at a U.S. college or university.
These people account for less than one-tenth of 1% of the U.S. work force, Ms. Pelta said, but "because they are highly skilled these are very key positions."
In the banking sector, she said, workers with H-1B visas are risk analysts, statisticians, and financial modelers.
"These are specialists in applied mathematics and people with highly technical backgrounds," she said. "We just don't have enough U.S. students graduating in these fields."
The National Foundation for American Policy says that 12 of the largest Tarp recipients combined applied for fewer than 1,000 H-1B visas in 2007.
For example, State Street Corp. said that it has reduced its number of H-1B employees in recent years, according to Carolyn Cichon, a spokeswoman for the company. She would not say why or provide any figures to quantify the reduction.
Kelly E. Sapp, a spokeswoman for Bank of America, said that H-1B employees account "for significantly less than 1%" of the Charlotte bank's work force. "We are not a company that traditionally relies on such employees," she said. "That is something more likely at a tech company."
Ms. Pelta said most banks have reduced the number of H-1B holders that they hire because it is an expensive process. The application costs $2,000, not including attorney's fees. If a bank could find an American with similar skills, she said, it would be "foolish" to file for an H-1B visa.
"These senators don't like the H-1B program," Ms. Pelta said. "They opportunistically attached this to a stimulus bill riding on the sentiment that we should provide jobs to Americans first, but H-1B's are so highly specialized that these are people that will help us as a country. … These senators are attacking a program that isn't part of the problem, but it could be part of the solution."
Mr. Fragomen said that, though it may apply to only a small number of people, the hiring provision would have a significant "ripple effect." Many foreign nationals who work for a bank in the United States on an H-1B visa, he said, would return to their home countries and work in financial services there.
"Global banks need to have a global work force," he said. "The idea of hiring just American workers is shortsighted. If you hire a percentage of foreign nationals, then you have a stable of people developing with the banks that can then can return to their home country and have an impact on recruiting overseas."
The Employ American Workers Act is to take effect for fiscal year 2010 and 2011. Ms. Pelta said employees who hold an H-1B visa and currently work for a financial services company will not be affected, unless they transfer to another bank that is getting Tarp funding.