that we have the authority to know what's happening in American companies in terms of foreign investment. Now all that exists is a hodgepodge of unrelated areas of authority. It's an uncoordinated system of reporting requirements for some information, and it's scattered in various places. As I understand the studies that are underway in the executive side, they are directed to understand it, rationalize it, and bring into one body of knowledge presently available authority. Is that somewhat the posture of the executive side?

Mr. BENNETT. The studies being conducted by the Treasury and Commerce Departments will provide a vast amount of information on foreign investment in the United States. The outcome of these studies could reveal some need for further action. We don't know. These are tremendous studies covering all aspects of foreign investment.

Senator WILLIAMS. The areas where there is some authority to prohibit foreign investment include banking, aviation, shipping, communications, et cetera. Are you familiar wth the basic SEC disclosure requirements under present law?

Mr. BENNETT. I have some knowledge of it.

Senator WILLIAMS. Where does this early disclosure run to, the various departments?

Mr. BENNETT. Well, the SEC disclosure requirements are made public, of course, and are also available to the other departments. The basic statistical gathering information is not given wide distribution. in terms of the specific investment. That is why we have felt it desirable to negotiate specific arrangements with particular major investors. Now, I also would like to answer some questions that were asked earlier

Senator WILLIAMS. Who would be in charge of those negotiations? Mr. BENNETT. All foreign negotiations are basically under the control of the President and the Secretary of State. The Commission with Saudi Arabia is handled by the Treasury, as the chairman. The Commission with Iran is chaired by the Secretary of State. Discussions with Kuwait have been conducted by both the Treasury and State Department.

Senator WILLIAMS. How did the Civil Aeronautics Board hear about the Pan Am proposal?

Mr. BENNETT. The world is somewhat different now than it was some weeks ago when there was an attempt to purchase Daimler-Benz. The investors realize that the world has changed. They now realize. that that sort of thing is not appreciated. So in this case representatives who were working between the Iranian Government and Pan American with the knowledge of both came to the U.S. Government. They came to the Secretary of the Treasury. They came to the President's economic adviser.

Senator WILLIAMS. Where were they required to go first?

Mr. BENNETT. They were not required to go anywhere until they asked permission, which they haven't yet done, from the CAB and the Pentagon. In due course they would have been required to do that. They thought it was desirable to have consultation in advance of that. They got that consultation. They got a general comment. They have not made specific applications, and I, for one, don't know whether the

deal will go through. The Iranians may decide they don't want to buy into the loans of that airline or to take options to buy some of that stock. We don't know.

I would like to say again the question came up. How much OPEC investment has there been here in the private market.

Senator WILLIAMS. I think it should be clear we are not talking boycott with Iran. We are just talking about a foreign investment.

Mr. BENNETT. I think Mr. Robinson thought he heard a number of $4 billion from the Treasury on private OPEC investments here. In fact, the long-term stocks and bonds investment in our private sector is much less than a billion dollars, mostly in portfolio investments. The question was also asked, are we going to have to recycle more through the United States than our oil deficit. Last year we imported oil of about $26 billion. This year it will probably be $25 billion to $30 billion. The amount of total money that came here directly from these countries last year was only $11 billion, far less than we are purchasing.

Senator WILLIAMS. In those areas where advance notice is now required before substantial investments why were they chosencommunications, navigation, aviation? Because we felt it was in our interest to be in a position to say "no" to foreign investment in these important areas. Is that right?

Mr. BENNETT. I think in those cases it was primarily a matter of national defense and of public information. That's a general description of the areas. This legislation, of course, goes way back. The Trading with the Enemy Act goes back to 1917 although it was reconfirmed in 1933. These go far back in our history.

Senator WILLIAMS. What we propose in this bill is to say that our national well-being, or national economic security, as well as our defense security are all involved here. Right now, if foreign governments moved in and wanted to acquire control of an automobile manufacturer, there is no law that would require early notice of intention, and prior notice before acquisition. Is that correct?

Mr. BENNETT. I think you are right, but I would like to make comments on the comments. First of all I would like to comment on the magnitude of potential OPEC investments. Foreigners probably do not have any intent. I'm afraid of placing enough money here that would allow them to own a large proportion of American corporations. IBM stock has a value of $30 billion. Exxon has a value of $18 billion. These are large numbers, particularly when you realize that OPEC is a diverse, dispersed group. They will not all invest in one pot in one place. We have to consider this in context, in terms of relative size. The thought of them buying control of GM is ridiculous. If they did come, we do not at this point have any law that says they cannot buy shares of GM, except that they do have to register with the SEC, and the major countries have now agreed that they will not make any large purchases without advance consultation, and they realize if they bought that company, they are subject to the whole panopoly of our laws, including the defense regulations.

I think these are important considerations, but you are literally correct. There is at this time no law that says they can't buy shares of GM. Senator WILLIAMS. I didn't say GM.

It seems as a practical matter and a matter of historical fact, that a foreign investor could easily acquire control of a troubled company, Lockheed, for example, that falls under the defense umbrella.

Lockheed, of course, was not turned down by the Defense Department because of the defense umbrella. It was turned down by Lockheed because of their negotiations with Textron. In due course I would hope the defense regulations would have come into play.

Senator WILLIAMS. Could our Government have stopped that? Mr. BENNETT. Our Government could have made it obviously undesirable for anybody to sell his shares of Textron to a foreign government by saying the whole business of the company would no longer be there. You cannot carry on defense contracts without the permission of the Defense Department.

Senator WILLIAMS. This is a selected area of national interest where it could be prohibited?

Mr. BENNETT. I think there are 11,000 corporations subject to that control now.

Senator WILLIAMS. Under Defense?

Mr. BENNETT. Yes, sir.

Senator WILLIAMS. It doesn't go to other areas of national wellbeing?

Mr. BENNETT. If you take a foreign group that wants to buy a hunk of real estate in this country, theoretically they could go in there and say, "No Jewish residents allowed." If they did, they would be breaking other laws of this country. They would be breaking the laws against discrimination.

Senator WILLIAMS. S. 425 does not have any prohibitions in it. It is a disclosure bill. On the basis of the information required to be disclosed in the bill about the desire to acquire a certain percentage of stock equity, the President would then be authorized to find that the proposed acquisition is contrary to our best interests. Again, we deal with fundamentals here in terms of well-being, domestic economy, national security, and our basic foreign policy. There is no prohibition written in except the existence and delegation of authority to the President to prohibit the completion of individual transactions.

It seems as though we were getting into an area where it might be beneficial to talk in terms of what new laws are needed from the viewpoint of the administration. I, and many of my colleagues, believe S. 425 is necessary legislation. Do you think it would be constructive to work towards closing some of the gaps and filling in with new authority in the area of foreign investments?

Mr. BENNETT. We would like very much to work closely with you, particularly on this disclosure of what is behind investments. We think this is an important area, but we would like to separate it from legislation on foreign investment.

We feel that the investment climate, not just for OPEC investment, all investment, is a delicate matter. We want to preserve an attractive investment climate. But at the same time we want it to be abundantly clear that we will allow no investment to come here and attempt to impose discrimination or to enact discriminatory pressures on other countries. We think we can accomplish this working with you

At this point, prior to the completion of the basic survey that is now under way, we are inclined to recommend only new legislation in the disclosure area, not new legislation giving the President new authority. We realize it's authority to him. If he were to use that authority across the board, he would be violating treaties. In practice, if you gave it to him, he wouldn't violate those treaties. He would have to renegotiate them."

Senator WILLIAMS. There is no plan for an across-the-board prohibition here at all.

I think your last statement suggests that there can be productive days ahead in developing this further.

This committee has gone through long, laborious and interesting, and more than that, fascinating, years with the SEC. The technical business of working things out with those who have the executive responsibility is a long, laborious process. Out of it, we have done a great deal of good in cooperation with the executive agencies. I would hope that we can achieve a similar relationship here.

Mr. BENNETT. I certainly hope so.

Senator WILLIAMS. Senator Javits?

Senator JAVITS. Well, Mr. Chairman, you have certainly covered the subject very completely. I just had one or two questions.

Mr. Bennett, it is a fact, is it not, that a major problem of the Government is not to encourage a policy which can overwhelm law and subvert law, and if it so and I am sure it is the general feeling isn't it an insidious and very dangerous situation by the Corps of Engineers of the United States to admit that it has allowed itself to be a party to discriminating, against Americans who are Jewish, in hiring practices? Isn't it a pretty sad affair that disclosure came from the Antidefamation League. I have before me a copy of a letter by one of theanother one of the cases they cite, of an outfit that is offering money to the United Bank of Denver. In their letter of intent, one of the statements is:

Said loan should be considered a subordinated debt. No board or director shall be Jewish and no stockholder controlling 20 percent or more of the bank's outstanding stock can be Jewish.

These are actual facts. An agency, a part of the Department of Defense, hands-large sums and being offered for relending by banks on these conditions. Wouldn't you agree this is so undermining of the American system that it demands special efforts of a major character to deal with them, including law?

Mr. BENNETT. Mr. Chairman, I don't think you need new law to recognize that it is improper and probably illegal for any U.S. Government agency to discriminate in hiring. I am sure that should not take place.

With respect to a demand that any depositor in a bank might attempt to enforce against Jewish directors, I think the Comptroller of the Currency's action yesterday and comparable actions of other bank regulatory authorities will adequately take care of that.

Again, I am aware of no instance in which any such unacceptable demand has been accepted.

Senator JAVITS. It is a factor, is it not, that the money is being offered around with the possibility of buying companies and stocks-is being

offered around in this way? Wouldn't you agree, Mr. Bennett, even if the legislation was simply disclosure legislation of the kind Senator Williams is now discussing that it would have an effect to abate these nuisances? I mean if the people really have to lay it on the line, do you think it's likely to be raging around as it seems to be?

Mr. BENNETT. I don't think legislation is necessary to, as you put iteuphemistically-abate this nuisance. I have not had an opportunity to study the new amendment the chairman suggested yesterday.

Senator JAVITS. Mr. Bennett, with the Chair's indulgence I'd like to ask just one other question. I noticed that you indicated in your statement that at its peak a foreign investment accumulation of the OPEC nations may not exceed $200 to $250 billion. Is that the revised Treasury estimate as to the impact of the Arab oil price and what they may be able to have available? It doesn't say in how many years, but I assume some reasonable near term, 5 years, let us say? Is that your revised estimate as to the size of the problem?

Mr. BENNETT. This is a late estimate. It is not a tremendous revision of any earlier estimates we had been using in the Treasury. It's a number that we think may be achieved before 1980. It takes into account, first, the rapidly growing imports in these areas, which do impose an economic burden. They are rapidly growing. It takes into account the impact of conservation measures we expect to implement. OPEC countries accumulated $60 billion last year, and will accumulate about $50 billion this year. We expect this accumulation to come to a halt in the future. Some countries, for example Algeria, are probably already this year going to be spending more than they are taking in.

Senator JAVITS. It's so important because the order of magnitude of what we have to face is a critical mass in this situation. Estimates have been so extravagant, running up to a thousand billion dollars, that I think it's a very important item of fact that the Treasury now has the idea that this is the order of magnitude.

Mr. BENNETT. This is not an area where you can be certain, but there are other institutions both here and in Europe that come to roughly comparable numbers. We are not saying that oil prices aren't a problem. We are merely saying this is the financial accumulation. The real burden is paying for this. That's the real economic burden. Senator JAVITS. Thank you very much.

Senator WILLIAMS. Thank you, Mr. Bennett.

Mr. BENNETT. Thank you.

Senator WILLIAMS. Senator Metzenbaum is still with us, I trust. STATEMENT OF HOWARD METZENBAUM, FORMER U.S. SENATOR FROM THE STATE OF OHIO

Senator WILLIAMS. We are pleased to have you on the first-day hearings of this legislation. Senator Metzenbaum, knowing that you are one who was early in indicating interest and concern, and constructive and creative with ideal legislative ideas, about increasing foreign investment in the United States.

Senator METZENBAUM. Thank you, Mr. Chairman.

I appreciate the opportunity to appear before this committee. I commend you and your cosponsors on S. 425, a bill to amend the Securities and Exchange Act of 1934, in order that our laws may more