When the Federal Reserve needed Wall Street’s help with its pandemic rescue mission, it went straight to Larry Fink. The BlackRock Inc. co-founder, chairman, and chief executive officer has become one of the industry’s most important government whisperers. In contrast to other influential financiers who’ve built on ties to President Trump, Fink possesses a power that’s more technocratic. BlackRock, the world’s largest money manager, can do the things governments need right now.
The company’s new assignment is a much bigger version of one it took on after the 2008 financial crisis, when the Federal Reserve enlisted it to dispose of toxic mortgage securities from Bear Stearns & Co. and American International Group Inc. This time it will help the Fed prop up the entire corporate bond market by purchasing, on the central bank’s behalf, what could become a $750 billion portfolio of debt.
One part of the Fed’s plan is to buy bond exchange-traded funds. BlackRock itself runs ETFs under the iShares brand, and could end up buying funds it manages. There are rules in place to avoid conflicts of interest—for example, it won’t charge the Fed management fees on ETF shares. “BlackRock is acting as a fiduciary to the Federal Reserve Bank of New York,” says a spokesman for the company. “As such, BlackRock will execute this mandate at the sole discretion of the bank, and in accordance with their detailed investment guidelines.”
Still the arrangement is bringing new attention to the company’s scale and ubiquity. “It’s impossible to think of BlackRock without thinking of them as a fourth branch of government,” says William Birdthistle, a professor at the Chicago-Kent College of Law who studies the fund industry.
Fink was on the shortlist in 2012 to replace outgoing Treasury Secretary Tim Geithner. Now he’s widely viewed as a contender for that post in a possible Joe Biden administration. It isn’t clear how that would be received by the Democratic Party’s left flank. But Fink stands out for Wall Street-friendly members of the party who see value in the expertise of financiers.
The company’s primary business, index fund management, has been hailed for making investing easier and cheaper. And while some of his funds hold shares of fossil fuel companies, making Fink the bête noire of some environmentalists, he urges companies to better prepare for the realities of climate change and pursue a purpose beyond simply profit.
There’s probably no other financial institution that brings to the table what BlackRock does. It’s experienced in running large portfolios on behalf of others. It’s ubiquitous in markets for everything from passive, index-linked products to hands-on mutual funds, with $6.5 trillion in assets under management as of March 31. It’s the largest issuer of ETFs, which act like mutual funds but trade on an exchange. It actively manages more than $625 billion in bond funds for pension plans and other institutional clients. Almost anyone looking to buy a diverse portfolio quickly would consider BlackRock—and the Fed did the same. In a virtual hearing of the Senate Banking Committee on May 19, Fed Chairman Jerome Powell said BlackRock was hired for its expertise and “it was done very quickly due to the urgency” of the matter.
Beyond money management, BlackRock’s software platform, Aladdin, appealed to the Fed. The program evaluates risk for clients that include governments, insurers, and rival wealth managers, monitoring more than $20 trillion in assets. (Bloomberg LP, the parent company of Bloomberg News, sells financial software that competes with Aladdin.)
BlackRock has ascended to speed-dial status among Washington officialdom in part through shrewd business maneuvering. It scooped up Barclays Global Investors, including its iShares ETF division, in the fallout from the 2008 crisis. That gave BlackRock a stronghold in low-cost index funds, transforming it into the world’s largest asset manager almost overnight—and supercharging more than a decade of growth.
At the same time, the money manager built a powerful advocacy arm. Its sphere of influence reaches beyond the central bank to lawmakers, presidents, and government agency heads from both political parties, though its hiring leans Democratic. Bloomberg found only a handful of current BlackRock executives who came out of the George W. Bush administration, but more than a dozen Barack Obama alumni. These include Obama’s national security adviser, senior adviser for climate policy, the former Federal Reserve vice chairman he appointed, and numerous White House, Treasury, and Fed economists.
Its influence is also global: The Bank of Canada tapped BlackRock in March as an adviser for its purchases of commercial paper, the short-term debt that companies use to fund day-to-day expenses such as payroll. Last month the European Union hired the money manager to advise it on how to incorporate environmental, social, and governance practices into the way EU banks manage risk.
blackrock is very close to the democratic party in the united states. some measures of blackrock’s power:
Despite BlackRock’s supposed omni-potence, it is relatively unknown in Britain. It might be the biggest private manager of assets in the world but, in political terms, the company has existed in relative obscurity. That is, until last year, when it handed George Osborne a £650,000 contract for giving ‘advice’ one day a week.
In recent months, the firm’s political profile has been rising. When the former German MP Friedrich Merz suddenly re-emerged into German politics as a possible successor to Angela Merkel, BlackRock’s name appeared again: Mr Merz is the chairman of its growing German business….
As it grew, BlackRock expanded its lobbying operations, especially in Washington DC and Brussels. Its ranks have swelled with employees who have regulatory or political experience. According to the Campaign for Accountability, the firm has hired at least 84 former US government officials since 2004. Since the crisis, the company has had 400 meetings or calls with senior US officials and more than 50 with senior UK officials, including presidents and prime ministers, the campaign group claims (BlackRock declined to comment on these figures).
‘BlackRock is petrified that regulators will turn the screws on them the same way they did with the banks, so they want to pre-empt that,’ said Octavio Marenzi, founder of Opimas, a financial consultancy.
BlackRock’s political hires include Hillary Clinton’s former chief of staff, Cheryl Mills; the former chairman of Switzerland’s central bank, Philipp Hildebrand; a former senior adviser to Jacques Chirac, Jean-François Cirelli; and George Osborne’s former chief of staff, Rupert Harrison. Many of its government hires are there for their expertise, not just their connections: Mr Harrison, for example, is not a lobbyist but analyses markets and co-manages an investment fund.












