BlackRock is an American owned global investment management corporation. They happen to be the largest asset manager in the world, managing over $7.4 trillion in assets.
Right now the Federal Reserve is buying unlimited amounts of Treasury bonds and mortgage-backed securities in order to keep the system from collapsing.
To be frank, the system has collapsed, they are simply keeping it afloat in the eyes of the public by artificially purchasing assets, which transfers ownership to the private Federal Reserve.
Now, the Federal Reserve has tapped BlackRock, a private investment company to help manage the current bailout crisis. BlackRock will manage and oversee three debt-buying efforts.
Bloomberg reports, BlackRock will,
Buy and manage portfolios of newly issued bonds from U.S. companies as well as portfolios of investment-grade bonds and ETFs, according to the Federal Reserve Bank of New York. (BlackRock is the world’s largest issuer of ETFs.) BlackRock will also oversee purchases of packages of mortgages on commercial real estate guaranteed by one of three government agencies: Government National Mortgage Association (Ginnie Mae), Federal National Mortgage Association (Fannie Mae), and Federal Home Loan Mortgage Corp. (Freddie Mac). Still to be determined is how much money BlackRock will direct in these efforts.
The excuse being made is BlackRock is being used as they have “expertise in evaluating and managing different kinds of debt” and “the Fed’s bond-buying program fit more squarely in an asset manager’s wheelhouse”.
This of course is garbage.
The Federal Reserve has no business selectively buying up debt, neither does BlackRock have any business getting involved. It would appear to me, the Federal Reserve does not have the manpower to manage the crisis alone, and they need help.
Our next question must be, has this happened before?
In the aftermath of the 2008 financial crisis, the Federal Reserve turned to BlackRock to oversee $130 billion in distressed debt formerly on the books of Bear Stearns Cos. and American International Group. Back then, BlackRock wasn’t nearly as large a force in global finance as it is today. The firm oversaw a total of $1.3 trillion at the end of 2008. At the beginning of 2020, it had about $7.4 trillion in assets under management.
There we have it.
Back in 2008, when BlackRock was much smaller, the Federal Reserve turned to them for help. It would appear, the last crisis helped BlackRock amass even more assets.
This would appear to be a conflict of interest.
Following the 2008 financial crisis, BlackRock drew some objections for its involvement in the clean-up. “Why is it that BlackRock is the only firm qualified to manage the assets of special-purpose vehicles?” Senator Chuck Grassley, the top Republican on the Senate Finance Committee, asked at a January 2009 hearing, questioning the no-bid government contracts awarded to the firm. (“They come with a world-class reputation,” answered Timothy Geithner, who was then the Treasury secretary.)
Every contractor would love to win a NO-BID CONTRACT. That is unfair business practice, not to mention BlackRock should not be involved to begin with.
Ahh, but they have a World Class reputation, and in this day and age, that is reason enough to write off the laws of the United States of America.
Since they have such a reputation, we should probably take a look at their leadership class and see what we can glean from it…
I will leave that to you. BlackRock Leadership.