Bis repetita. In December 2008, the Federal Reserve (Fed) had called on four asset managers to implement a massive asset repurchase program of $ 700 billion (646 billion euros, at current prices) intended to save the financial markets: BlackRock, Pimco, Goldman Sachs and Wellington had bought mortgage securities on behalf of the American Central Bank. On Tuesday March 24, the Fed mandated BlackRock to assist it in carrying out part of its plan to rescue the US credit markets.
Meanwhile, the one that was a small management “store” twelve years ago has become, under the leadership of its founder Larry Fink, the world's leading player, with $ 7.4 trillion in assets under management (as of December 31 2019). In 2008, the group created a separate entity, called the Financial Markets Advisory (FMA), to help banks and other major financiers to value and process their portfolios of toxic assets. BlackRock relies on its Aladdin technology platform, which provides data and analytical tools on financial risks.
Since the creation of FMA, "650 missions were carried out for 250 customers in 35 countries", indicates the firm on its website, without however specifying the names. Some are known as Greece, the Central Bank of Ireland or the European Central Bank. FMA was also mandated by the Fed to manage the toxic assets of Bear Stearns Bank and the insurer AIG.
Signs of weakness
This new mission entrusted by the Fed consists in acquiring corporate bonds as well as mortgage loans issued by American public agencies. BlackRock insists that it exists "A wall of China" between the Financial Markets Advisory entity and its profession as an investor.
A major subject because, for the first time, the American Central Bank included in its asset repurchase program index funds or exchange-traded funds (ETF), some of which have shown signs of weakness recently. BlackRock is the world's number one ETF. He should therefore be led to acquire some of his products with Fed money.
The Fed’s mandate, the terms of which are not being disclosed, is seen as a sign of BlackRock’s influence with US officials. Like a distant echo of the controversy in France on pensions, but on a much larger scale. Because as much as the Larry Fink firm, with its small 1% market share in France, has little to gain from a reform that would favor capitalization, it could also be greatly enriched by this position of choice. BlackRock and the Fed will need to be transparent to eliminate any suspicion.
