Funds backed by Qatar may take a $3 billion stake in Credit Suisse (CS), another step toward sovereign funds owning a piece of almost every large financial institution in the US and Europe. Due to losses related to subprime financial instruments, it is a good thing that the entities have money to invest.
According to The Sunday Telegraph "powerful funds backed by the Qatari government are considering assembling a significant stake in Credit Suisse, one of Europe’s largest banks."
The news is likely to raise the question, once again, as to whether there is any threat to large financial companies or the financial system itself if sovereign funds from Asia and the Middle East own significant pieces of multinational banks and investment houses.
Since the firms need the capital, the answer should be simple.
Investment funds in Switzerland, Germany, the UK, and the US are not rushing to shore up the finances of banks within their own borders. With trillions of dollars in private equity available, this is telling. Whether it is distaste for risk or concerns about returns being too long-term, money from LBO and hedge funds is not forthcoming.
There have also been no funds available from the financial arms of the governments in the US and UK. Normally, the governments would not put up capital for "bail outs" of banks, but, if they are not willing to take the step why should they keep others from doing so?
If the money will not come from anywhere else, how can the actions of the sovereign funds be restricted or even questioned?
Douglas A. McIntyre
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