BlackRock Is Now ‘Fourth Branch of Government’
Key Excerpts from Article on Website of Bloomberg
Posted: August 1st, 2022
When the Federal Reserve needed Wall Street’s help with its pandemic rescue mission, it went straight to Larry Fink. The BlackRock cofounder, chairman, and chief executive officer has become one of the industry’s most important government whisperers. 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. 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. “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.” 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. BlackRock’s growth raises questions over how big and useful a company can become before its size poses a risk. And then there are the potential conflicts. One arm of BlackRock knows what the Fed is buying, while other parts of the business participating in credit markets could benefit from that knowledge.
Note: Watch an excellent documentary showing how BlackRock, Vanguard, and several other institutions are the largest shareholders in almost every major corporation you can think of. For more along these lines, see concise summaries of deeply revealing news articles on corruption in government and in the financial industry from reliable major media sources.