Vermont Independent politician, Senator Bernie Sanders, and Iowa Republican politician, Senator Chuck Grassley, sponsored a provision for the TARP stimulus package that will prohibit any recipient of TARP funding from hiring H-1B visa holders.
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Pundits and charlatans in the fields of Economics and Finance, all concur that a nation's financial services sector aids efficient allocation of resources among competing needs in an economy. Social scientists also assert that the level efficiency of any organization, or economic sector, is largely a function of its employees (its human capital mix). Hence, this implies that any policy that affects the human-capital mix of entities operating in the financial services sector, like the Sanders-Grassley provision, would consequentially affect the efficacy of financial intermediation in the economy. Thus, this simply means that the TARP provision sponsored by Messrs. Sanders and Grassley, has the potential to either: mutilate the already beleaguered U.S. economy, or; revitalize the currently anorexic U.S. economy.
Underlying the said TARP provision, is the noble desire to minimize the stiff labor-market competition—from foreign-born business school graduates—faced by hordes of laid-off U.S. financial sector employees. However, this may be a well intended, but ill-advised provision, that may flounder in achieving its envisaged objectives. Otherwise stated: this TARP provision has strong chances of attenuating the foundations supporting the hegemony of the U.S. financial services sector, thus; enfeebling the U.S.'s avant-garde status in the global financial services sector.
The quintessential feature of financial markets during the last two decades has been increasing Globalization: financial services firms increasingly engage in cross-boarder transactions that breach cross-cultural and linguistic boundaries. To effectively navigate these socio-cultural boundaries, an entity needs to be knowledgeable in the business practices, and prevalent cultural trends in the foreign operational environments. Furthermore, it is also essential for an entity to have a rolodex of on-the-ground contacts that expedite transactions in the foreign operational environments. Thus, investment entities circumnavigate socio-cultural barriers that impede cross-boarder transactions, by enlisting the services of foreign-born United States of America-educated individuals.
Hence, the dominant trend on Wall Street for the duration of the last decade, has been to hire people who: can speak the languages spoken in foreign target business environments; have a plethora of contacts in the foreign target business environments; have experience in executing transactions in the foreign target business environment.
Hence, the dominant trend on Wall Street for the duration of the last decade, has been to hire people who: can speak the languages spoken in foreign target business environments; have a plethora of contacts in the foreign target business environments; have experience in executing transactions in the foreign target business environment.
Therefore, restricting recipients of TARP funding from enlisting the services of foreign-born, but U.S.-educated-persons, effectively encumbers them from engaging in cross-boarder transactions, at a time when local business opportunities are dwindling. This limits the exploitable opportunity-set available to recipients of TARP funding. Hence, it is evident that the Sanders-Grassley TARP provision has strong chances of undermining the profitability, and recovery prospects of TARP funding recipients.
