Chinese financial companies are buying into the American banking scene where prices are at a low ebb partially because of the sub-prime problem. Which puts US regulators somewhere between a rock and a hard place. The Fed must sign off on any transaction in which a foreign investor takes more than a 5% stake in a U.S. bank. And it must approve any applications to open branches in the US.

On the one hand, the government is supposed to be committed to unfettered cross-border deals as when American companies try to buy stakes in China.
On the other hand, Chinese banks operate in a very different regulatory environment.

It has been suggested this is why the U.S. has dragged its feet on letting Chinese banks set up U.S. branches.

Minsheng Bank has agreed to buy a 9.9% stake in San Francisco’s UCBH—marking the first such move by a Chinese bank on U.S. soil.
Industrial & Commercial Bank of China (ICBC) and China Merchants Bank have applied to the Federal Reserve to open stateside branches.
Citic Securities has taken about 6% of Bear Stearns for $1 billion.
CCB, China’s third-largest bank, bought Bank of America’s operations in Hong Kong and Macao last year.

China’s three biggest banks rank among the top 20 in the world by market value, with ICBC overtaking Citigroup and Bank of America as the largest in July.

This is not to say that buying into American banks is that great an idea. Pete Hahn, a fellow at City University’s Cass Business School in London said, ‘In the current environment, you would have to be extremely brave or extremely stupid to buy a U.S. bank.’
Source: BusinessWeek