Sovereign Wealth Funds: Cause for Concern?

enlarge image

Deputy Secretary of the Treasury Robert Kimmitt (Elsa Ruiz/Asia Society)

NEW YORK - With protectionist fears of politically-motivated investments rising along with timely infusions of capital into some of America’s best-known financial firms, sovereign wealth funds have come to the forefront of international financial debates. Four distinguished panelists came to the Asia Society to share their thoughts on the controversy surrounding these funds.

Deputy Secretary of the US Treasury Robert Kimmitt praised foreign investment and cautioned against alienating foreign sovereign wealth funds. Stephen Shwarzman of the Blackstone Group also urged cool-headedness in dealing with SWFs, and spoke based on his inside experience interacting with these foreign funds. Edwin Truman of the Peterson Institute for International Economics took a more cautious approach, arguing for increased transparency and established operating standards for SWFs, while Bob Pozen praised the role of SWFs in the global financial system, arguing that their investments should be treated no differently than investments from hedge funds or private equity firms and disputing the idea that the funds should be given only non-voting shares.

After each panelist's opening comments, Henny Sender of the Financial Times moderated a discussion exploring all of these issues in more depth.

In his opening remarks, excerpted below, Robert Kimmitt defined investment as the “lubricant of the entire global economy,” and argued that foreign investment in the US has been a consistently positive force, accounting for 10% of employment in the private sector—but despite this, foreigners now see the US as increasingly skeptical of FDI (foreign direct investment). Kimmitt went on to discuss the history of the sovereign wealth fund debate before concluding with an analysis of current approaches to sovereign wealth funds from Congress, the executive branch, and international financial institutions.

Excerpt: Deputy Secretary Kimmitt's remarks (9 min., 36 sec.)

Listen on Demand (1 hr., 23 min.)