Are Foreign Bailouts Good for the Economy?

Critics worry rush of overseas cash heralds fundamental
By Jim O'Neill,  Newser Staff
Posted Jan 25, 2008 11:30 AM CST
Are Foreign Bailouts Good for the Economy?
Saudi Prince Alwaleed bin Talal looks on during a ceremony at the Louvre museum in Paris in this Sept. 4, 2007 file photo. Alwaleed, the Citigroup shareholder that came to the bank's rescue during the credit crisis of the early 1990s, might do so again now, the Wall Street Journal reported on its Web...   (Associated Press)

(Newser) – Wall Street firms, battered by the collapsing subprime market, shored by their bottom lines by selling ownership stakes to foreign governments. Although the investments represent a significant change in the US economy, they drew little public criticism and no government intervention. That reaction—or lack thereof—follows years of lobbying by overseas governments and large American financial firms, the Wall Street Journal reports.

Some $37 billion poured into the troubled firms, which include Citigroup and Merrill Lynch. Once anathema, foreign ownership has been welcomed. "What would the average American say if Citigroup is faced with the choice of 10,000 layoffs or more foreign investments?" asks Sen. Charles Schumer. Critics, however, worry the new “open door policy” may change the US economy forever. (Read more Citigroup stories.)

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