At a time that Wall Street is in the grip of a credit crisis, many central banks around the world have substantial dollar holdings that they want to invest in America. It sounds like a win-win situation, yet our politicians are saying no.

Take China, whose foreign exchange reserves, much of them in dollars, were recently estimated at $1.6 trillion. Or Japan, sitting on $1 trillion in foreign exchange reserves. The financial assets of these and other governments are growing more rapidly than the world economy as a whole.

Some dollars abroad are used to purchase products and services in America, while others are used to buy American government securities. Increasingly, foreign governments filter their dollars through investment funds known as sovereign wealth funds.

Many members of Congress have questions about the political motivations of SWFs. Rep. Jim Moran, a Democrat of Virginia, recently formed a bipartisan Congressional task force to explore the national security and economic implications of SWFs.

Senators Shumer and Clinton want the International Monetary Fund, an international organization affiliated with the United Nations, to establish guidelines for the “transparency” of SWFs. “Transparency” is the latest buzz word for latent skeptics of SWFs, but an affiliate of the United Nations is no place to look for guidance on organizational transparency.

China has SWFs; so too do the governments of Singapore, Norway, Alaska, and several Middle Eastern countries. Over the past two years alone, such funds have infused hundreds of billions of dollars into American financial institutions such as Citigroup, Merrill Lynch, Morgan Stanley, Blackstone, Carlyle, Och-Ziff Capital Management Group, and Nasdaq. No doubt, shareholders and employees of these American companies benefit enormously from these investments.

But American investors and American politicians see SWFs differently. The former see them as useful instruments to repatriate potentially trillions of dollars into the American economy. The latter view SWFs with suspicion, as potential instruments for foreign governments to gain control of American assets.

The American government does not complain loudly when the Chinese government holds hundreds of billions dollars in government securities. But when China Investment Corp., a government-backed SWF, seeks to purchase equity interests in American corporations, our politicians are alarmed. Do SWFs have political motivations, or are they merely passive investors looking for a good return on their investment? Of course, we have national security concerns with some foreign investments. But we already have substantial rules under the Committee on Foreign Investment in the United States to prevent foreign ownership of American assets that will lead to harmful effects. Witness the recent withdrawal of China’s Huawei Corp. from an attempt to team with Bain Capital to acquire 3Com, a defense contractor.

In addition, America has rules that proscribe governmental ownership of certain U.S. assets such as broadcast stations. American securities laws already make it impossible for any entity, foreign or domestic, to acquire a major stake in a publicly traded company without public disclosure.

But in most instances, we should be encouraging rather than discouraging foreign investment. Even partial ownership of an American company is vesting in the American economy and the American dream. Those who invest in America want to see its economy succeed, not fail. Terrorists usually do not usually buy a building before blowing it up.

Ultimately, it is the government ownership that gives SWFs a particularly bad name. But government-owned funds will not take over America, because such entities lack the nimbleness and market savvy of purely private investors. Government and private business do not work well enough together in public-private partnerships to offer a threat to American industry.

American history is replete with examples of such investments that had poor private returns. Explorers and colonial companies from Columbus’s time through the 18th century were often public-private partnerships with more of a governmental than a private return. The British East India Co. had many exclusive economic rights in the British colonies but did not succeed in commercial domination of America. SWFs collectively have trillions of dollars in uncommitted capital. America competes with every market in the world to attract those funds for investments, and we need these dollars to offset our credit crunch. We must make sure that our current crop of politicians does not unnecessarily frighten the investment capital away.

A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@ furchtgott-roth.com.