Are anti-Arab attitudes being manipulated to block the attempt by Middle Eastern investors to buy control of Washington's Financial General Bankshares?

The issue was raised in a letter to the Federal Reserve Board written by Robert Altman, the attorney representing the group from Saudi Arabia, Kuwait and the United Arab Emirates that for more than a year has been trying to take over the local bank holding company.

"There is a disturbing undercurrent" running through recent letters to The Fed objecting to the group's plan to organize a bank holding company, Altman complained.

"Repeated references are made to the so-called 'foreign' group and 'foreign' interests suggesting that foreign residence of the applicants' investors is somehow a negative attribute," he wrote.

"Any suggestion, however veiled, that the foreign residence of these particular investors should be a negative factor should go unheeded."

Although the question of foreign ownership -- particularly ownership by mysterious Middle Easterners with millions of petrodollars to invest -- always has been an issue in the bitter dispute, the level of innuendo has increased lately.

At Financial General's urging, board members -- mostly local businessmen -- of all the company's banks wrote the Federal Reserve objecting to the takeover plan.

Board members of the Virginia FG banks also complained to the state's commissioner of financial institutions, who decided that foreign ownership of the banks raised questions about whether they could adequately serve the public.

In another attempt to muster opposition to the takeover plan, Financial General also told the Federal Reserve that ownership of the banks by Middle Eastern investors might somehow drag them into the Arab boycott of Israel.

Raising every conceivable issue -- whether relevant or racist -- is the way the corporate takeover game is played, and the Financial General fight is slowly becoming a championship match.

It is the first public takeover fight involving Middle Eastern investors, the arena in which petrodollar managers are learning the hard way how to buy control of an American company.

It is the biggest public fight ever for control of an American bank. Bank power struggles are usually so genteel that Maryland's banking law doesn't even contemplate an unfriendly takeover, so the attorney general is writing new law interpretations for this case.

The legal ruling by U.S. District Court Judge Oliver T. Gasch in the first courtroom battle last spring already is being cited in other corporate power struggles. When the Middle Eastern group bought 20 percent of FG's stock, it should have made the purchase public, Gasch said, but failure to do so does not prevent them from continuing to try to buy the remainder of the company.

The Federal Reserve Board too will set precedent when it decides whether to allow the Middle Eastern group to form a bank holding company so it can make the public offer for the rest of FG's stock.

Although the Fed's decision will be made on complex legal issues, all that will matter to a lot of people is whether "foreigners" are allowed to buy an American bank. That ought not to be the issue.