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WASHINGTON - A WHITE House spokesman has shrugged off questions about Temasek Holdings' bigger stake in Merrill Lynch, amid signs that the United States government's qualms about foreign state investors are fading.
Hard hit by the collapse of housing-related debt, Merrill said on Monday that it was selling new stock to the public and to Temasek, which had an 8.85 per cent stake as at June 30.
Temasek's fresh US$3.4 billion (S$4.7 billion) investment seemed likely to push its stake above 10 per cent - traditionally a trigger for enhanced US scrutiny of such investments from a national security perspective.
But White House spokesman Tony Fratto shrugged off questions about Temasek's bigger stake in a US financial institution, the latest in a string of similar investments by state-owned sovereign wealth funds (SWFs) from China, the United Arab Emirates and Singapore.
'We never comment on private transactions,' Mr Fratto said. 'As a matter of policy, the United States is open to foreign investment and we welcome it when overseas investors choose to invest in US firms.'
'It would be a concern if overseas investors chose not to invest in US firms,' he added in reply to a question from Reuters.
After protests by US lawmakers undid a controversial 2006 sale of management businesses in six US seaports to United Arab Emirates-based Dubai Ports World, the administration of President George W. Bush stepped up its vetting of foreign transactions deemed to affect national security.
For instance, in March, Bain Capital Partners broke off a deal with China's Huawei Technologies to buy US network equipment maker 3Com, because of what it called opposition from the administration's Committee on Foreign Investment in the United States.
A year ago, Mr Bush signed into law a Bill, sparked by the Dubai Ports experience, which would boost oversight of acquisitions of US companies by foreign firms.
Now, with a sputtering economy, the Bush administration is welcoming investment from abroad and urging US corporations to seize opportunities to rebuild their capital quickly.
Last month, the US Treasury said officials should use a light touch when vetting investments by SWFs, even though critics have faulted the funds for a supposed lack of transparency, and saw the deals as giving away leverage over US institutions.
US Treasury Secretary Henry Paulson has prodded financial institutions to raise capital to counter losses from sub-prime debt, and made clear that the Bush administration was not opposed to SWFs putting money into Wall Street.
'There is a choice to be made here,' he said in a speech in January. 'Institutions that strengthen balance sheets can continue to play their vital role in financing businesses and individuals - thus minimising the impact of market turmoil on the real economy.'
REUTERS
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