China Cashes In

0 Comments | Insight on the News, Jan 24, 2000 | by J. Michael Waller

From Intelligence Sources

RELATED ARTICLE: Will Congress Check China?

After failing last year to get the U.S. Market Securities Act of 1999 to the House floor for a vote, the bill is making a comeback with Rep. Spencer Bachus, an Alabama Republican, taking over where Gerald Solomon of New York, the GOP former House Rules Committee chairman, left off.

While Solomon continues to work as a consultant behind the scenes, Bachus, chairman of the House Banking and Financial Services subcommittee on Domestic and International Monetary Policy, and Rep. Dennis Kucinich, an Ohio Democrat, are leading the charge for the U.S. Market Securities Act. Their bill would establish an Office of National Security at the Securities and Exchange Commission to report to Congress the names of foreign-government affiliates seeking to enter the U.S. stock and bond markets.

Former congressional investigator and Red Dragon Rising author Ed Timperlake says Wall Street's fear that "if you can monitor it, you can regulate it," is not at all what this is about. "Let the investor make an informed choice. If you want to buy the investment after knowing about it, then fine."

Roger Robinson, the former senior director of international economic affairs at the National Security Council under President Reagan, says the private sector deserves to know who is involved with these companies. "All we want is a list of names to be given to the appropriate congressional committees," Robinson says.

Wall Street sees it as a China-hawk bill that wants to drive Beijing out of the capital markets. Indeed, the China hawks fear that funds raised by the Chinese communist regime -- more than $7 billion from bonds, may be finding their way into the arms of the People's Liberation Army, and their fears appear justified. But China is not the only country under the gun. Supporters of the bill argue that the same scrutiny will be conducted on every foreign country. "I want U.S. investors to know where their money is going and how it is being used," regardless if it's China, Russia or Canada, Robinson says emphatically. As of now, U.S. companies face more scrutiny than foreign companies when it comes to the bond market, Robinson says.

The one thing Republicans do not want to be accused of is trying to regulate the market, says Timperlake. "There has been a real honest effort to attract interest in this bill. This is a national-security issue. Solomon was out front with it and Roger Robinson has been busting state pension funds."

But Wall Street's tactic to characterize it as a regulation nightmare may be working. The new bill has been shoved in at least four congressional committees, effectively burying it in a sea of darkness, according to congressional sources. "If leadership doesn't step in, it's likely to wallow away," Robinson says.

Bachus shows no sign of surrender. Insight sources say he is considering whether to add more language to the bill, which would cover human-rights and religious-persecution issues. In other words, anyone who comes on to the U.S. bond market with a poor human-rights record and practices religious persecution will be exposed and the buyer then will have a choice about whether to support such activities.