Sovereign Funds, Foreign Leaders Sitting Out Bailout

Sovereign wealth funds, foreign leaders say US needs to sort out own mess
By Jim O'Neill,  Newser User
Posted Sep 25, 2008 9:23 AM CDT
Japan's Nomura has snapped up pieces of Lehman Brothers' Asian and European operations.   (AP Photo)
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(Newser) – Sovereign wealth funds that were eager to snap up US assets earlier this year are staying on the sidelines now, as the US crafts a massive financial rescue plan aimed at breaking up the logjams that have frozen credit markets, the Washington Post reports. Despite pleas from Treasury Secretary Henry Paulson to help prop up the financial system, foreign governments are taking the stance that the meltdown is an American problem to solve.

"The situation we face here in Europe is less acute and member states do not at this point consider that a US-style plan is needed," said one European official. Middle Eastern and Asian sovereign wealth funds that rushed to buy stakes in Morgan Stanley and Citigroup have demurred from further capital infusions, having seen the value of their investments fall precipitously.