February 27, 2008 11:33AM

Sovereign Wealth Funds: A Sticky Situation

By Alexis Glick

Note to John McCain:

This morning on Money For Breakfast I interviewed U.S. Deputy Treasury Secretary Robert Kimmitt. I asked him if John McCain became the next president of the United States, if he would be interested in remaining in his position. The answer? YES. He has spent the vast majority of his career in public service and has served in his current position for almost three years. He is a prominent member of the president’s financial team and has dedicated much of his time and energy on sovereign wealth funds and their investments in U.S. corporations like Citi (C) and Merrill Lynch (MER).

What is a sovereign wealth fund?

It’s a state-owned investment fund composed of financial assets such as stocks, bonds, real estate or other financial instruments. The most well-known is Abu Dhabi Investment Authority with approximately $900B in assets.

Why do we care?

Because these funds are investing big stakes in U.S. companies. Some say they could use their economic investment to sway the government politically.

How do they separate politics and economics? That is one of the secretary’s biggest mandates. He is working with the IMF and the World Bank to create a list of “Best Practices.” These practices would in essence create guidelines for investments in U.S. and European companies and ensure that they remain politically agnostic.

My issue…our issue…his issue: Do we have any or enough leverage in this environment with a weak dollar and even weaker financial institutions to give them a set of criteria for investing when we need and welcome their money?!

Check out the interview:

Oh and in case you missed it, he is rooting for the Hoyas! No.11 in AP and No.10 in the ESPN poll. He’s looking forward to March Madness