WASHINGTON — A day after the Federal Reserve Board announced that it will allow three Chinese banks to operate in the United States and expand their footprint here, Democratic Sen. Robert Casey raised a series of questions about the decision.
In a letter Thursday to Fed Chairman Ben Bernanke, Casey voiced concern that the three banks, which he said are substantially owned by the Chinese government, will undercut American competitors.
"China has been shown to aggressively use its government-backed enterprises to underprice and drive out competition. Did you consider the impact these state-run institutions would have on our domestic banks?" the Pennsylvania Democrat wrote.
The Fed announced Wednesday its approval of an application by the Industrial & Commercial Bank of China to become a bank holding company by acquiring up to 80% of the U.S. operations of the Bank of East Asia. The Chinese bank is partnering in the transaction with the country's state-owned sovereign wealth fund.
The Fed also approved applications from the Bank of China and the Agricultural Bank of China to establish new U.S. branches.
In his letter to the Fed, Casey posed questions about the ability of U.S. regulators to get information from the Chinese banks if there is a legal dispute.
"Did the Chinese government make any promises regarding transparency of financial information of Chinese banks which will now be operating in the U.S.?" Casey wrote.
Finally, the Democratic senator questioned whether the Fed's approval of the banks' U.S. licenses was connected with recent concessions that the United States received on foreign ownership of brokerages in China.
Casey is up for re-election in November, and his letter hit on themes of U.S. competitiveness with China that could play an important role in many congressional races.
Casey, who chairs the Joint Economic Committee, said that he plans to raise his concerns at a June 7 hearing where Bernanke is scheduled to testify.
