UPDATE 1-US Senate panel examining sovereign wealth funds

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By John Poirier and Rachelle Younglai

WASHINGTON, Feb 12 (Reuters) - The Senate Banking Committee is considering the effects that foreign government fund investments have on U.S. economic and financial security, the panel's top Democrat and Republican said on Tuesday.

The committee's Democratic chairman, Christopher Dodd, and Richard Shelby, the top Republican, said they were continuing to monitor the implementation of a newly strengthened law that reviews foreign investment in the United States.

The International Monetary Fund estimated that more than 20 foreign government investment funds, known as sovereign wealth funds are mostly financed by petrodollars and foreign exchange reserves. They manage between $1.9 trillion and $2.9 trillion around the world, the lawmakers said.

About $30 billion in sovereign wealth fund investments have been made in the United States since November, they said.

The funds have fallen under intense scrutiny from U.S. lawmakers after a number of funds from the Middle East and Asia came to Wall Street's rescue by investing billions of dollars into major banks stung by the subprime mortgage crisis.

"Reaction to this recent growth in sovereign wealth fund investments and their effects on the U.S. economy have been mixed," Dodd and Shelby said in a joint letter to members of the committee.

The motivations behind the foreign government investments are at center of the concerns among U.S. and global financial officials who are trying to determine if their aims are political or purely profit driven.