Global Strategic Finance Initiative: Publications, Events and More

Douglas Rediker in MSN Money | 'Is America in a Permanent Decline?'

Communications — Wed, 02 Jul 2008 07:02:00 -0400

New America in the News:
..."The U.S. was always No. 1 and assumed it would be No. 1 and acted accordingly," says Doug Rediker, a former investment banker and a co-director of the Global Strategic Finance Initiative at the New America Foundation, a Washington, D.C., think tank. "Now other nations are catching up. There are competitors fighting for market share in every industry. The U.S. is under pressure..." LINK

Douglas Rediker in America.gov | 'How Welcome Is Investment by Sovereign Wealth Funds?'

Communications — Thu, 12 Jun 2008 13:52:00 -0400

New America in the News:

...In the United States, the due diligence process is already in place, says Douglas Rediker, a researcher at the New America Foundation.

“Our country is extraordinarily well protected by existing law and regulations” against any foreign investors driven by non-commercial intents, he told America.gov.

Other experts say more needs to be done to protect U.S. interests.

Peter Navarro, a business professor at the University of California, Irvine, proposed making strategic sectors such as telecommunications, ports, energy infrastructure and defense off limits to sovereign funds. He also proposed ownership caps and strict transparency requirements on their investments. Others called for limiting investment to nonvoting equity shares, suspending voting rights, or restricting funds to reciprocal arrangements.

Rediker himself, in a 2007 paper he co-authored, urged restrictions on control by or voting rights of sovereign wealth funds that invest in U.S. public companies.

But he changed his mind when Congress and the administration moved to make the review process for foreign investments in U.S. companies more predictable and comprehensible...LINK

Douglas Rediker in America.gov | 'How Welcome Is Investment by Sovereign Wealth Funds?'

Communications — Thu, 12 Jun 2008 09:15:00 -0400

New America in the News:

...Some policymakers and legislators in the United States and Europe worry that foreign governments can use sovereign funds to advance their strategic, economic, political or social interests, rather than their commercial interests.

So far, those fears have proved unfounded.

Nevertheless, due diligence is necessary to ensure that vital national interests are preserved, said Daniella Markheim, a Heritage Foundation scholar, in a 2008 paper.

In the United States, the due diligence process is already in place, says Douglas Rediker, a researcher at the New America Foundation.

“Our country is extraordinarily well protected by existing law and regulations” against any foreign investors driven by non-commercial intents, he told America.gov...

Sovereign Wealth Funds: Foreign Policy Consequences In an Era Of New Money

Ron Tang — Wed, 11 Jun 2008 03:44:00 -0400

Over the past several months, few issues in international finance have generated as much discussion and comment as have Sovereign Wealth Funds (“SWF”s). This Committee deserves enormous credit for recognizing the potentially significant foreign policy consequences of the rapid accumulation by foreign governments of enormous, growing pools of capital. These large concentrations of government controlled wealth raise complex issues that transcend traditional boundaries between foreign policy, financial markets, international economics and national security.

It is my belief, however, that too much focus on SWFs may, in fact, divert attention from the more fundamental foreign policy issue that these funds have come… more

Financing America’s Infrastructure

Communications — Mon, 09 Jun 2008 17:48:00 -0400

Today the New America Foundation released a policy paper by Douglas Rediker and Heidi Crebo-Rediker, co-directors of the New America Foundation's Global Strategic Finance Initiative. The executive summary is pasted below. Also, see a PDF of the entire policy paper: http://www.newamerica.net/files/Financing_America_Infrastructure.pdf

Contact: Erin Drankoski, 202-997-8727, drankoski@newamerica.net. For further information on New America's Global Strategic Finance Initiative and Economic Growth Program, click here.

Executive Summary

America's basic infrastructure is outdated, worn, and in some cases, failing. Most experts agree that it is inadequate for meeting the demands of the 21st-century global economy. If we are to remain competitive, we must… more

Public Comments on the Proposed Regulations On Foreign Investment Into the U.S.

Ron Tang — Mon, 09 Jun 2008 03:38:00 -0400

The Honorable Nova Daly Deputy Assistant Secretary U.S. Department of the Treasury

Dear Mr. Daly:

We are pleased to submit these comments with respect to the recently proposed regulations regarding the implementation of the Foreign Investment and National Security Act of 2007 (“FINSA”) amendments to Section 721 of the Defense Production Act of 1950 (“Exon-Florio”).

Background

As a general matter, we believe that U.S. and global economic health are strengthened by the free flow of investment capital and by the increased liquidity that open markets provide. As significant providers of capital, foreign investors have thus far been a positive influence on U.S. markets and… more

Financing America’s Infrastructure

Ron Tang — Sun, 08 Jun 2008 23:41:00 -0400

America’s basic infrastructure is outdated, worn, and in some cases, failing. Most experts agree that it is inadequate for meeting the demands of the 21st-century global economy. If we are to remain competitive, we must invest in capital assets like roads, ports, bridges, mass transit, water systems, and broadband infrastructure. Many other countries -- both rich and poor -- see investing in infrastructure as imperative for economic survival and success in an increasingly competitive economic environment. But the United States has lagged in infrastructure investment, in both relative and absolute terms. We are spending less than 2 percent of GDP… more

NY Event: It's the Economic Recovery Plan, Stupid

Communications — Thu, 22 May 2008 04:30:00 -0400

A New America Event
05/22/2008 - 8:30am

As the debate on the economic slowdown moves from "if" to "when" to "how long," The New School's Schwartz Center for Economic Policy Analysis (SCEPA) and the New America Foundation will host a panel of top economists and business executives to discuss the best plan for an economic recovery.

Space is limited, please RSVP to specialevents@newschool.edu or (212) 229-5662 x 3570.

Douglas Rediker in CongressDaily | 'Sovereign Fund Growth Blurs Traditional Roles'

Communications — Mon, 05 May 2008 08:51:00 -0400

New America in the News:

...Combined sovereign wealth reached $3.5 trillion in 2007 -- the largest generator being China, according to the firm. Russia and Kuwait are next. And, according to recent news reports, two other countries with substantial population and/or wealth -- Saudi Arabia and India --are considering setting up sovereign wealth funds.

Douglas Rediker, co-director of the New America Foundation's Global Strategic Finance Initiative, noted that sovereign funds derive their assets from oil or trade imbalances that generate current reserves.

"Traditionally over the years, we and the IMF have been advocating that countries keep a significant amount of reserves to ensure they are protected from a rainy day. These countries did exactly what we and others advocated that they do," Rediker said.

But, he added, "at some point the reserves got so high" that the involved governments felt the need to diversify these reserves. As a result, "they are putting some of these into SWFs," explained Rediker... LINK

Doug Rediker in Harvard Political Review | 'Sovereign Wealth and Private Equity Funds are Here to Stay'

Communications — Tue, 22 Apr 2008 08:27:00 -0400

New America in the News:

Full article

. . . The new kids on the block, in terms of economic might, are sovereign wealth funds. Clouding their speedy rise are questions raised by Western media and governments about their management and purposes. Do they pose a threat to political stability? “That’s the three-trillion dollar question,” said Douglas Rediker, Co-Director of the Global Strategic Finance Initiative at the New America Foundation, in an interview with HPR. Sovereign wealth funds have never been this big before, or grown at such a pace. The International Monetary Fund has estimated that sovereign wealth funds could account for $12 trillion dollars by 2012.One problem that belies handy analysis of sovereign wealth funds, however, is their sheer diversity. Countries from Norway to Botswana operate sovereign wealth funds, and generalization about their aims or activities is difficult. But uncertainties about the motives of these funds are growing. . .

“The potential to use this finance as a political tool exists,” said Rediker. . . “There have been few if any instances where you can point to political influence having been part of an investment decision,” said Rediker. And it’s difficult to single out sovereign wealth funds for reform, for an important practical reason. Rediker noted that they disclose just as much information as private equity or hedge funds, and since giving up information can mean giving up market advantages, sovereign wealth funds are not keen on it. . . .

Doug Rediker in New York Times | Financier Aims to Buy Struggling Small Banks

Communications — Thu, 17 Apr 2008 14:54:00 -0400

New America in the News:

New York Times | Financier Aims to Buy Struggling Small Banks

. . . “For Abu Dhabi to come in and try to cobble together eight different thrifts into a multibillion-dollar deal is enormously complicated,” said Douglas Rediker, co-director of the Global Strategic Finance Initiative at the New America Foundation, a research organization in Washington. “But Wilbur Ross is an active investor who knows how to do this.” . . .

Doug Rediker in National Journal | New Moves on Wealth Funds

Communications — Sat, 15 Mar 2008 13:46:00 -0400

New America in the News:

New Moves on Wealth Funds (National Journal, subscription only)

. . . Some analysts suggest that the likely ineffectual nature of the forthcoming IMF code of conduct and the reluctance of the Bush administration to take a tougher line reflect the impotence of the United States -- the world's largest debtor nation -- in regulating sovereign wealth funds.

"The leverage is not with us," said Doug Rediker, co-director of the New America Foundation's Global Strategic Finance Initiative. "What happens if the Abu Dhabi Investment Authority says it won't change its ways? What are we going to do? Tell them to keep their money?" . . .

Watching Sovereign Wealth

Ron Tang — Thu, 28 Feb 2008 00:00:00 -0500

When the adjectives most often used to describe you are "secretive," "opaque" and "mysterious," you've got an image problem. Such is the predicament of sovereign wealth funds, the government-controlled investment vehicles, often in authoritarian states, that have become the bane of Western politicians. Yesterday, the European Commission became the latest body to propose transparency guidelines for these funds.

But the good news for sovereign wealth funds is that increased disclosure and transparency may actually be a win-win for everyone. A little openness can go a long way.

Market participants and regulators would benefit by gaining some insight into potential contagion risks and… more

Do Sovereign Wealth Funds Make the U.S. Economy Stronger or Pose National Security Risks?

Economic Growth — Wed, 13 Feb 2008 18:00:00 -0500

By way of introduction, I spent most of the last seventeen years working as an investment banker and private equity investor based primarily in London, England. This experience, I believe, gives me a somewhat different perspective on Sovereign Wealth Funds and the role that they play in today’s international capital markets. Currently, I co-direct the Global Strategic Finance Initiative at the New America Foundation. The New America Foundation is a non-profit, post-partisan public policy institute in Washington D.C.

Over the past several months, few issues in international finance have generated as much discussion and comment as have Sovereign Wealth Funds. I commend you and your colleagues for the informed and balanced views… more

Doug Rediker in AP | 'Foreign Investments Spur Concern on Hill'

Communications — Tue, 15 Jan 2008 11:38:00 -0500

New America in the News:

Foreign Investments Spur Concern on Hill (AP article appearing in Forbes and BusinessWeek)
The flow of funds from overseas could bolster the U.S. dollar, and sovereign wealth funds are the type of long-term investors that can stabilize the financial markets, said Doug Rediker, co-director of the international finance group at the New America Foundation. ...

Mission Accomplished

Articles — Thu, 15 Nov 2007 17:30:00 -0500

Perhaps it's time to add the European Bank for Reconstruction and Development to that list of things that, like houseguests and fish, can overstay their welcome. The bank now strays so far from its original remit that it risks spoiling the legacy of its earlier successes. The EBRD should quit while ahead, declare victory and be privatized.

At its pinnacle, the EBRD was a triumph of financial statecraft. Established in 1990 with funding from the U.S., the EU and other governments, it provided financing to companies in postcommunist Central and Eastern Europe at a time when the private sector shunned them.… more

Douglas Rediker in CQ Weekly on Sovereign Wealth Funds

Communications — Sun, 04 Nov 2007 13:25:00 -0500

New America in the News:

Last week, the New York hedge fund Och-Ziff Capital Management disclosed that it was selling a $1.3 billion ownership stake to an investment firm controlled by the government of Dubai. In September, another Dubai-controlled fund announced that it was buying about a fifth of the Nasdaq stock exchange. A Chinese government bank just entered into a partnership with the investment bank Bear Stearns Companies Inc. And the Blackstone Group private equity firm recently sold a $3 billion ownership stake to China's state investment company.

Flush with cash thanks to big trade surpluses and high oil prices, some foreign governments are looking for new ways to invest. Instead of playing it safe and buying U.S. Treasury securities, many are using special investment arms known as sovereign wealth funds to take ownership stakes in U.S. companies in such sectors as financial services and technology to maximize their returns. Many of the deals will not be subject to government review because, while the dollar amounts are large, the purchasers won't be controlling the companies.

The buyout activity is nonetheless posing a dilemma for Congress, which just addressed concerns about foreign investment that grew from a deal last year, quickly scuttled, that would have given a firm linked to the Dubai government control of operations at some U.S. ports. Last month a new law took effect to strengthen and clarify the rules governing the Committee on Foreign Investment in the United States, or CFIUS, a panel of executive branch agencies that screens the sale of American businesses to foreign interests; the Bush administration is now developing regulations to implement it.

The rapid growth of sovereign wealth funds is prompting some U.S. officials and policy experts to question whether the nation needs to consider more safeguards -- or at least a more consistent approach to regulating foreign acquisitions that would both assuage national security concerns and enable foreign investors to know what to expect when they contemplate making a deal in the United States. ...

So far, members of Congress have primarily focused on individual deals. That will have to change, said Douglas Rediker, a global finance expert at the New America Foundation, a public policy think tank. Sovereign wealth funds bring "this whole level of influence that's brought to bear on the markets as a whole, that involves currencies and the subtleties of specific investments and broader investment classes," he said. "That traditionally has not been within the realm of what Congress deals with." ...

Rediker notes must purchasers in several high-profile deals, including the Chinese purchase of part of Blackstone and the agreement between Dubai and Och-Ziff, each took 9.9 percent stakes of the U.S. firm. He speculates that the acquiring companies reasoned that a 10 percent stake constituted a de facto threshold for heightened scrutiny.

Rediker and his wife, Heidi Crebo-Rediker, recently wrote a paper arguing that the United States needs a comprehensive review of all its legislation and regulations governing foreign investment, then needs to develop a policy for monitoring foreign government investments smaller than the "controlling" interest that triggers a CFIUS review.

The Redikers contend that this would not scare away foreign investors but encourage more deals, as long as funds were certain about the treatment they would receive.

"You put some vigorous rules in place, but they are absolute, so people know [if] they make X investment, there's going to be Y result. Right now the area below which a full-blown CFIUS review is triggered is fraught with political risk, and political risk takes its toll on investment," Douglas Rediker said. ...

For the complete article, please visit CQ.com. (subscription only)

Doug Rediker and Heidi-Crebo Rediker Highlighted in National Journal

Communications — Sat, 03 Nov 2007 07:54:00 -0400

New America in the News:

Remember the slogan about Bill and Hillary Clinton in the 1992 presidential race -- two for the price of one? The New America Foundation seems to be getting something similar with the hiring of husband-and-wife tandem Douglas Rediker and Heidi Crebo-Rediker (although they'll both get paid at the think tank). The Redikers, former investment bankers in Europe, have returned to the United States to co-direct the foundation's Global Strategic Finance Initiative. The couple met in Washington about 20 years ago. After Douglas worked in Hungary and Heidi worked in Russia, they married in London, where they have spent the past 16 years working for Merrill Lynch and Lehman Brothers, among other firms. ...

At New America, the Redikers will have their hands full explaining the pace of financial markets to Washington legislators and regulators. "Policy makers still operate under a time consideration that is much more deliberative," Douglas says. "Markets operate in seconds."

For the complete article, please visit The National Journal website.

Washington Post Quotes Doug Rediker on Sovereign Wealth Funds

Communications — Tue, 30 Oct 2007 06:12:00 -0400

New America in the News:

The government of Libya, flush with oil, has amassed $40 billion and is ready to put it in play on Wall Street. China recently acquired a huge stake in one of the biggest names in U.S. finance. Tiny Qatar is adding $1 billion a week to its investment coffers and is trying to buy the leading grocer in Britain.

Developing nations, especially in Asia and the Middle East, are aggressively stockpiling some of the largest concentrations of investment money in history. The cash hoards, called sovereign wealth funds, are controlled not by state-run companies or private investors but by governments.

These investment pools are equal to or even bigger than the largest pension and private-equity funds in the United States, and many are highly secretive about their activities. The Abu Dhabi Investment Authority has an estimated $875 billion to invest, while China's first stab at a sovereign wealth fund, which started last month, has $200 billion. The largest private-equity firm has about $90 billion under management.

Sovereign wealth funds have been around for decades. But enriched by the surge in the price of oil, which settled at a record $93.53 yesterday, and the trade gap between the United States and Asia, these funds have grown to gigantic proportions. This has alarmed U.S. politicians and regulators, some of whom held a series of meetings on the topic here this month. Some on Wall Street say the growing prominence of these funds portends a fundamental shift in financing power away from Western nations. ...

About two dozen countries have established sovereign wealth funds, including Iran, the United Arab Emirates, Singapore, Kuwait, Australia and Russia. While precise data about each of the funds can be difficult to obtain, most Wall Street analysts agree that the value of the funds has reached about $2 trillion and is likely to grow at least fivefold by 2012.

"We want to be encouraging people to invest as much of this money in the U.S. as we can," said Douglas Rediker, a former investment banker who works at the New America Foundation in the District. "We are driving our way around the country every day and sending them our U.S. dollars at $3 or $4 a gallon. ... You really want those dollars recycled back into your economy, because if they aren't, it means they are going somewhere else and the dollar is less attractive and will continue to weaken." ...

For the complete article, please follow this link. Douglas Rediker co-directs the Global Strategic Finance Initiative with Heidi Crebo-Rediker, at New America.

New America Foundation Launches Global Strategic Finance Initiative

Communications — Thu, 18 Oct 2007 11:10:00 -0400

The New America Foundation is pleased to announce its launch of the Global Strategic Finance Initiative. The Initiative, co-directed by Douglas Rediker and Heidi Crebo-Rediker, is sponsored by the Economic Growth Program and American Strategy Program. The Global Strategic Finance Initiative will address the fast changing relationship between global capital flows, financial markets, foreign policy and national security.

“We believe that in the global era, the creative use of financial tools may prove every bit as important to national security as traditional diplomacy and military power,” said Steve Clemons, the Director of… more