BlackRock, the world’s largest asset manager with a portfolio worth over $9.5tn, is creeping into crypto. However, the firm has a controversial reputation. BlackRock dominates the market for ETFs, is notorious for exploiting a revolving door strategy with regulators, holds a 5% stake or greater in over 97% of the S&P 500 companies, and has a direct line with the Treasury Department. BlackRock also claims to prioritize ESG investing, but owns stakes in environmentally damaging firms such as ExxonMobil and Chevron. The firm has also been accused of investing in firms that are destroying rainforests and displacing tribal people.
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Introduction
BlackRock is the world’s largest asset manager, with a portfolio worth over $9.5 trillion. However, the firm’s reign has not been without controversy. In this article, we will examine BlackRock’s rise to power and its questionable practices, including its recent foray into the world of cryptocurrency.
BlackRock’s Dominion
Since its founding in the late 80s, BlackRock has surpassed its older and more established competitors, owning many of the big names on Wall Street, including Merrill Lynch and Barclays Global Investors. Additionally, more than 97% of S&P 500 companies with significant capital gains are in BlackRock’s portfolio, giving them voting rights and influence over the management of these companies.
Exploiting the System
BlackRock’s success can also be attributed to its cozy relationship with regulators in Washington D.C. The firm has exploited the “revolving door” strategy, with key figures moving between head positions in government and industry to ensure their businesses gain an edge. BlackRock has also staffed itself with former players in Washington and moved many of its own executives into government roles. This tight relationship has given BlackRock a direct line to the Treasury Department, with two former executives from the firm securing top economic positions under the current administration.
Beneficiaries of Money Printing
BlackRock was one of the biggest beneficiaries of the Federal Reserve’s money printing to prop up the stock market during the economic challenges of 2020 and 2021. The Fed purchased billions of dollars worth of corporate bonds and ETFs, with BlackRock receiving a majority of this business. The firm also made a significant move into real estate, owning over $60 billion in property assets. However, this move has been criticized for driving up housing prices and leaving many families priced out of owning a home.
ESG Hypocrisy
BlackRock has recently begun to advertise itself as an environmental activist organization, claiming that its primary focus is ESG (Environmental, Social, and Governmental) impacts. However, the firm owns a stake in companies such as ExxonMobil, Chevron, and Glencore, which have significant negative impacts on the environment. Additionally, environmentalists have accused BlackRock of investing in companies that destroy rainforests and harm tribal people.
Conclusion
Despite its controversial practices, BlackRock has managed to maintain a positive reputation. However, its recent dabbling in cryptocurrency has raised eyebrows, and it’s evident that the firm has a lot of baggage it needs to address before entering the crypto world.
