WASHINGTON: A program that has allowed wealthy foreign investors to obtain U.S. residency, and has long been the subject of complaints that it amounts to the wholesale selling of American citizenship, may be coming to a sputtering end.
Congressional authorization for a key part of the immigrant investor program was set to expire Wednesday with dim prospects for renewal following the failure of a Senate bill that would have addressed long-standing concerns about inadequate regulation.
The bipartisan bill would have created new regulations on a part of the program that makes up the bulk of visa applications and allows money from overseas investors to be pooled into funds to finance large projects around the U.S., often high-end real estate.
That effort failed last week when GOP Sen. Lindsey Graham objected to the bill and prevented it from moving through the Senate by unanimous consent, angering the two senior Republican and Democratic lawmakers who authored the legislation.
A narrow subset of big money and corrupt interests has now shown that they would rather kill the program altogether than have to accept integrity programs designed to clamp down on their bad behavior, Iowa Sen. Chuck Grassley, who authored the bill with Vermont Sen. Patrick Leahy, said on the Senate floor after the objection from Graham.
Graham spokesman Kevin Bishop said the South Carolina Republican needed more time despite the looming deadline. He would like to negotiate a long-term compromise with all parties that allows for the program to be successful while improving program integrity.
Despite the bipartisan sponsorship of the bill, the prospects for it being revived, or restoring the authorization without the changes, are uncertain. Lawmakers are wary of the overall program and Republicans in general have become increasingly anti-immigration.
U.S. Citizenship and Immigration Services, a component of the Department of Homeland Security that administers the investment visa program, said in a statement that it was evaluating the effects of the lapse in authorization.
The agency also said it is considering administrative actions to modernize and ensure the integrity of what’s formally known as the EB-5 program.
Our agency fully supports the EB-5 program and the many benefits it provides in boosting jobs, the economy, and particularly in providing assistance to distressed communities with foreign capital investment in the United States, it said.
Congress created the program to encourage investment from overseas and spur job growth in 1990, when the country was in recession.
The program required an investment of $1 million or just $500,000 in areas of high poverty and the creation of at least 10 jobs. In exchange, overseas investors got temporary residency along with their immediate family and could apply later for citizenship.
Congress also allowed money from visa applicants to be pooled into regional centers” that would fund large investments and could comprise several different businesses. The idea was to promote growth in poor or rural areas.
But the EB-5 program has enabled the drawing of regional maps that include only pockets of poverty. The result is that funds are often used to create large investment pools to finance luxury real estate projects in New York City, Miami, the San Francisco Bay area and other parts of the country in a way that critics say was not the intent of the program.
The program provides 10,000 visas to wealthy foreigners per year, primarily from China and other parts of Asia. Relatively few people start a standalone EB-5 enterprise, so the pooled funds make up the bulk, said David North, a senior fellow at Center for Immigration Studies who has testified to the Senate about the issue.
Aside from the optics of essentially selling citizenship, the program has been repeatedly tainted by scandal and authorities have sought to increase oversight of the foreign investors, their sources of income and the proposed investment projects. A Trump administration directive to raise the required investment was recently struck down by a federal court.
Every conceivable scam by every conceivable player is sort of available in this program and I think it well deserves its death, he said.
It has defenders, though. Steve Yale-Loehr, a professor of immigration law at Cornell Law School, said EB-5 provides valuable benefits to the U.S. Given our efforts to jump start the economy after the pandemic, it is particularly unfortunate that the Senate failed to extend the program, he said.
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