New York State Banking Board Denies Bid by Arab Investors to Take over Two State Banks

New York State Senate Minority Leader Manfred Ohrenstein hailed the New York State Banking Board’s decision today to deny a takeover of two New York State banks by a consortium of investors from Arab countries — Saudi Arabia, Kuwait and the United Arab Emirates.

Financial General Bankshares is the holding company for the Bank of Commerce in New York City and Community State Bank in Albany, as well as 10 other banks in Virginia, Maryland, Tennessee and the District of Columbia. The consortium made a bid for the holding company.

Ohrenstein, who for the past eight months has spearheaded a drive to deny the representatives of the Arab countries their bid, called the vote a victory for New York State.

He said “the integrity of New York State banking system has been upheld. The policies of these countries could have at times been hostile to the interests of the United States. I think this was a pivotal fact in denying the application, although the main reason given was a lack of reciprocity which have stressed for the last eight months.”

The vote was five in favor of the takeover, five opposed, one member abstained and one was absent from the 12-member board. State Banking Superintendent Muriel Siebert was one of the five who voted in favor of the takeover.

THE MAIN ISSUE

In a 40-minute debate, members of the board who opposed the takeover spoke of Arab control of petrodollars. Those in favor said that the takeover involved only a relatively small amount of money.

The main issue, as stated by Ohrenstein, was that the takeover would give the group a foothold in the banking system. Ohrenstein said the decision means that the process of taking over any of the banks of Financial General Bankshares in other states cannot be attempted.

Clark Clifford, former Secretary of Defense in the Johnson Administration, was counsel for the consortium, and former Missouri Senator Stuart Symington served as adviser.

A number of Jewish leaders supported Ohrenstein in his successful effort to prevent the takeover. Jewish Federations throughout New York State also supported Ohrenstein.

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