It’s almost comforting to know that for virtually any commercial transaction between U.S. and China companies, there is a China bashing wacko out there who will find a reason to panic. It’s like freakin’ clockwork.
The latest inanity relates to the ICBC purchase of a controlling interest in the Bank of East Asia, as well as approval of additional branches for some other PRC banks. Senator Bob Casey of Pennsylvania is apparently losing sleep over this deal and wants the Federal Reserve to explain itself:
A Federal Reserve decision to let Chinese banks acquire U.S. lenders was challenged by Senator Bob Casey, who said it could open the way for Chinese government-run institutions to undercut U.S. banks.
“I worry that these banks and their U.S. subsidiaries will use their state support as a way to underprice U.S. banks,” Casey, a Pennsylvania Democrat and chairman of the Joint Economic Committee, said in a letter yesterday to Fed Chairman Ben S. Bernanke.
OK, you might be thinking that Casey is someone who should be held up as a role model. I mean, it’s rather impressive that a high-functioning person with Down Syndrome could actually get elected to the U.S. Senate.
I know it’s easy to fall into that thinking, but I would caution you against it. Casey is not at all stupid, he just represents a state that has lost a lot of manufacturing jobs, and the folks he represents (and the labor unions that support him) blame China for their troubles. Casey doesn’t give a rat’s tushee about Chinese banks. He is, however, very interested in scoring some cheap points as he rails against fictitious Chinese subsidies.
FYI, if you’re still slightly nervous about China’s banks coming to get you, read “Five Reasons China’s Banks Are Not Taking Over The U.S. Banking System” in Forbes. It’s pretty simple. And by the way, after the gazillion dollars of free money that the Fed gave to U.S. banks in the aftermath of the 2008 recession, I don’t think America’s hands are clean enough to criticize financial institution subsidies.
You know, come to think of it, if Beijing did decide to subsidize ICBC, allowing it to build up market share in the U.S. with more favorable rates on the retail side of things, I might actually welcome it. I mean, after all that free money given to them by the Fed, U.S. banks still shit all over their retail customers and still don’t lend enough to small business.
No, I really don’t think we have anything to fear from the Chinese banks.
About The Author - Stan Abrams is a Beijing-based IP/IT lawyer and law professor with an M.A. from Johns Hopkins in International Relations, a J.D. from Boston College Law School, a B.A. from Pomona College, and writes at China Hearsay. (EconMatters author archive here)
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
© EconMatters All Rights Reserved | Facebook | Twitter | Post Alert | Kindle