10 votes

BlackRock takes command

6 comments

  1. [3]
    skybrian
    Link
    This article seems to be mostly insinuation rather than explanation. One thing I learned is that BlackRock has a contract with the Federal Reserve and some people don't like it. So what they are...

    This article seems to be mostly insinuation rather than explanation. One thing I learned is that BlackRock has a contract with the Federal Reserve and some people don't like it. So what they are doing now? But to answer that, I get more out the New York Times article, which links to the contract itself. See Exhibit A for the investment objectives.

    It appears that the Federal Reserve is giving the general orders and Blackrock is doing specific transactions. This contract is about purchasing commercial mortgage-backed securities, as part of the market bailout. I don't see Larry Fink's opinions about Social Security being relevant here? How are they going to do anything nefarious by purchasing some mortgage-backed securities instead of others? Maybe there is something wrong with this, but you won't find out from reading this article.

    I'm not going to look closely at the other claims because, unfortunately, this is a general pattern for many leftist authors. They care more about their agenda than about figuring out what the heck is going on and explaining it clearly. And people who agree with them on politics eat it up, because the bad guys must be up to something bad.

    I mean, I'm not an expert or anything, but I can tell when I'm learning something and when I'm not.

    4 votes
    1. [2]
      no_exit
      Link Parent
      They are potentially profiting by purchasing their own securities on behalf of the government. The article mentions this here: This is also mentioned in the NYT article: It's a blatant conflict of...

      How are they going to do anything nefarious by purchasing some mortgage-backed securities instead of others? Maybe there is something wrong with this, but you won't find out from reading this article.

      They are potentially profiting by purchasing their own securities on behalf of the government. The article mentions this here:

      As I wrote in my 2016 book Beyond Banksters, these governments and corporations “sought Fink’s advice, despite the fact that (as Fortune reported in 2008) BlackRock’s Larry Fink ‘was an early and vigorous promoter [of] the same mortgage-backed securities’ responsible for the crisis. ‘Now his firm is making millions cleaning up those toxic assets,’ Fortune noted.”

      This is also mentioned in the NYT article:

      The details of the arrangement, including how much BlackRock will be paid for its services, have not yet been released. But it promises to be a lucrative venture for the firm, which could also be in a position to profit from the advice it gives.

      Under one of the programs that BlackRock will help lead, the Fed can buy exchange-traded funds that hold stakes in investment-grade bonds, a type of investment that BlackRock sells.

      BlackRock found itself in a similar situation during the last crisis. After Bear Stearns and American International Group collapsed, the New York Federal Reserve retained BlackRock to help oversee billions of dollars in ailing assets that had belonged to them. The firm helped price and sell those assets for the government at the same time it was helping private clients buy similar assets.

      It's a blatant conflict of interest that is overlooked in part because this effort:

      Not surprisingly, for several years there had been some financial voices calling for BlackRock to be designated as a “systemically important financial institute” (a SIFI), which would mean that it would be far more heavily regulated and would need to meet potentially higher capital requirements from U.S. regulators.

      was lobbied against and has so far been defeated by BlackRock.

      4 votes
      1. skybrian
        (edited )
        Link Parent
        So, the idea is that BlackRock can buy their own ETF's and make money on it. But, apparently a lot of BlockRock ETF's have very low expense ratios. This doesn't seem all that lucrative? Here's an...

        So, the idea is that BlackRock can buy their own ETF's and make money on it.

        But, apparently a lot of BlockRock ETF's have very low expense ratios. This doesn't seem all that lucrative?

        Here's an article I found: Cheap ETFs Are Hot, But BlackRock’s Premium Funds Pay the Bills.


        Edit: in retrospect, I've been argumentative and closed-minded about this. I'll just say that I'm in favor of curiosity about what BlackRock is up to, even if I'm sometimes lazy about investigating it myself, and can't in good conscience require anyone else to do homework either.

        1 vote
  2. no_exit
    Link
    BlackRock is the largest asset management fund in the world, responsible for $27 trillion of the global economy, and they've been appointed to head the US's corporate debt purchase program.

    BlackRock is the largest asset management fund in the world, responsible for $27 trillion of the global economy, and they've been appointed to head the US's corporate debt purchase program.

    Larry Fink has long been committed to privatizing Social Security and this current crisis might just be the right opportunity. Of course, it will be called something innocuous or warm and fuzzy, like the CARES Act, and it will be greeted in the mainstream media as an urgent, pragmatic decision.

    1 vote
  3. skybrian
    Link
    Matt Levine wrote about this a bit today, or more generally what the Fed is up to when it's buying bonds: The Fed Will Buy Bond ETFs Now

    Matt Levine wrote about this a bit today, or more generally what the Fed is up to when it's buying bonds: The Fed Will Buy Bond ETFs Now

    1 vote
  4. weystrom
    Link
    BlackRock - name so generically dystopian, you wouldn't put into your cheap sci-fi novel.

    BlackRock - name so generically dystopian, you wouldn't put into your cheap sci-fi novel.