WASHINGTON, Mar 25 (Reuters) The chairman of the Senate Banking Committee proposed to give Congress more oversight of foreign acquisitions of US companies, but stopped short of saying lawmakers should have the power to veto deals.

The executive branch of the US government dominates the review approval process, a system that backfired badly on the Bush administration when Republican lawmakers objected to an approved contract under which an Arab company was to manage operations at US seaports.

After an uproar in Congress over the possible national security implications of the Dubai Ports World deal, the company this month said it would sell the US assets it had just acquired to a US buyer.

Richard Shelby, an Alabama Republican who heads the Senate's banking panel, set out draft legislation yesterday that would require administration officials to report to Congress that they are reviewing such proposed deals. The leaders of both parties in both houses of Congress as well as heads of key committees would be notified.

But Shelby backed away from an option he had been considering for Congress to be able to overturn deals that get administration approval. A spokesman said Shelby sought to strike a balance between lawmakers' oversight and ''not injecting undue uncertainty and delay that could undermine foreign investment in the US'' The bill, to be voted on in Shelby's committee next week, would require longer US reviews of deals involving foreign state-owned companies or ''critical'' US infrastructure, according to a statement issued by the committee.

It would make the Defense Department the vice chair of the Committee on Foreign Investments in the United States, the inter-agency committee that reviews acquisitions of US companies that may involve national security. The panel is now chaired by the Treasury department.

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