Warren Grills Yellen Over Why $9 Trillion BlackRock Not Treated as Risk to Economy

Warren Grills Yellen Over Why $9 Trillion BlackRock Not Treated as Risk to Economy

The senator suggested the world’s largest asset manager should be declared “too big to fail.”

By Jessica Corbett

Sen. Elizabeth Warren on Wednesday pushed Treasury Secretary Janet Yellen on why the federal government hasn’t dubbed BlackRock, the world’s largest money manager with nearly $9 trillion in assets under management, “too big to fail” without significantly impacting the economy.

The contentious exchange between the Massachusetts Democrat and former Federal Reserve chair came during a remote hearing of the Senate Committee on Banking, Housing, and Urban Affairs. Earlier this month, Warren was named chair of its Subcommittee on Economic Policy, which oversees economic growth, employment, credit, monetary policy, support for businesses, disaster assistance, and the Financial Stability Oversight Council (FSOC)—which is led by the treasury secretary.

“It isn’t just banks that pose a risk to the economy. In 2008, two investment companies, Bear Stearns and Lehman Brothers, failed, triggering the 2008 crash,” the senator said during the hearing. As a result, she explained, Congress created FSOC and “gave it the power to designate non-bank firms as ‘too big to fail.'”

Firms designated as a “systemically important financial institution,” Warren added, “get the same stronger oversight as the ‘too big to fail’ banks.'” The senator then questioned Yellen on whether FSOC will stick that label on BlackRock anytime soon.

Although Yellen said it is “important to look very carefully” at the risks posed by the firms like BlackRock, she also said that “it’s not obvious to me that designation is the correct tool” to address such concerns with the asset management industry.

Yellen repeatedly pointed out that “FSOC has looked at this issue in the past” and put out a report on the greatest risks posed by such firms. The treasury secretary added that she is “just beginning a work program with FSOC,” telling the senator that risks from asset managers will “certainly” be on the list of issues addressed by the body.

“I understand that when the stock market is going up, it is easy to ignore risks that can be building up in the system. That was the mindset of the regulators that led up to the 2008 crash, and that is how taxpayers ended up on the hook for a $700 billion bailout of the giant banks,” Warren said. “When the party is going strong, it’s the job of the regulators to take away the punch bowl.”

Some progressive commentators praised Warren’s push for more oversight.

“Yellen is clearly very uncomfortable with financial regulation,” tweeted David Dayen, executive editor of The American Prospect. “This was a really bad sequence for her. And good probing from Warren.”

“When the party is going strong, it’s the job of the regulators to take away the punch bowl.”
—Sen. Elizabeth Warren

Matt Stoller of the American Economic Liberties Project remarked: “I like the Elizabeth Warren of 2009-2014, and it appears that she’s back. Janet Yellen probably did not enjoy this back and forth.”

By contrast, a BlackRock spokesperson told CNBC that “we support financial regulatory reform that increases transparency, protects investors, and facilitates responsible growth,” but that the firm shouldn’t face the same rules as big banks.

“The past two administrations in the U.S. and numerous global regulators have studied our industry for a decade and concluded that asset managers should be regulated differently from banks, with the primary focus being on the industry’s products and services,” the spokesperson said. “BlackRock is not a bank, and as an asset manager, we are a heavily regulated company.”

Bloomberg noted Wednesday that “during the Trump administration, FSOC shifted away from attaching risk labels to specific companies and re-directed the council toward ‘activities-based’ oversight. The decision was controversial, with Warren and other Democrats complaining that the panel had relinquished its most potent tool.”

As the news outlet also highlighted:

BlackRock alumni have accepted or are in line for top jobs in the Biden administration, including Wally Adeyemo, a former senior adviser at the asset manager who the president has picked to be deputy treasury secretary. During his confirmation process, Warren questioned Adeyemo—a longtime ally of hers—but refrained from asking whether FSOC should designate BlackRock. The Senate is expected to soon vote on Adeyemo’s nomination.

Vice President Kamala Harris tapped Mike Pyle, BlackRock’s former chief investment strategist, to be her top economic adviser and Brian Deese, who was the firm’s global head of sustainable investing, leads [President Joe] Biden’s National Economic Council.

Even before he took office, Biden faced pressure from progressives to refrain from appointing corporate executives, consultants, or lobbyists to his Cabinet and administration. In response to the president’s selection of Deese, Sunrise Movement political director Evan Weber said that “there are many diverse, qualified people that can help Joe Biden and Kamala Harris Build Back Better who didn’t choose to work at predatory investment firms. The revolving door between Wall Street and the White House does no good for working people or the planet.”

Source: Warren Grills Yellen Over Why $9 Trillion BlackRock Not Treated as Risk to Economy | Common Dreams News




Watch LIVE 10AM: United Nations – International Day for the Elimination of Racial Discrimination

Watch LIVE 10AM: United Nations – International Day for the Elimination of Racial Discrimination

The International Day for the Elimination of Racial Discrimination is observed annually on the day the police in Sharpeville, South Africa, opened fire and killed 69 people at a peaceful demonstration against apartheid “pass laws” in 1960.

In accordance with General Assembly resolution 75/237 of 31 December 2020, the President of the General Assembly will convene a commemorative plenary meeting of the General Assembly to mark the International Day of the Elimination of Racial
Discrimination on Friday, 19 March 2021, at 10:00 a.m., in the General Assembly Hall.

As per operative paragraph 42 of General Assembly resolution 75/237, the meeting will focus on the midterm review of the International Decade for People of African Descent.

Dr. Uzodinma Iweala, author, medical doctor, CEO of The Africa Center, and eminent person active in the struggle against racial discrimination will be invited to attend the meeting and address the Assembly on the occasion. The United Nations High Commissioner for Human Rights, Ms. Michelle Bachelet Jeria will also address the commemorative meeting.

In September 2021, the United Nations General Assembly will bring together world leaders for a one day meeting in New York to mark the twentieth anniversary of the adoption of the Durban Declaration and Programme of Action under the theme of “Reparations, racial justice and equality for People of African Descent.”

The United Nations General Assembly reiterates that all human beings are born free and equal in dignity and rights and have the potential to contribute constructively to the development and well-being of their societies. In its most recent resolution, the General Assembly also emphasized that any doctrine of racial superiority is scientifically false, morally condemnable, socially unjust and dangerous and must be rejected, together with theories that attempt to determine the existence of separate human races.

The United Nations has been concerned with this issue since its foundation and the prohibition of racial discrimination is enshrined in all core international human rights instruments. It places obligations on States and tasks them with eradicating discrimination in the public and private spheres. The principle of equality also requires States to adopt special measures to eliminate conditions that cause or help to perpetuate racial discrimination.






House hearing on rise of violence and discrimination against Asian Americans: Watch Here!

House hearing on rise of violence and discrimination against Asian Americans: Watch Here!

The House Judiciary Subcommittee on the Constitution, Civil Rights, and Civil Liberties is holding a hearing on the discrimination and violence Asian Americans have faced both historically and since the onset of the COVID-19 pandemic. 

The hearing begins at 10AM ET and you can watch it here. There will be two panels of witnesses that will ‘consider ways to prevent racially motivated attacks as it examines both the historic and more recent forms of discrimination felt by Asian Americans’, House Judiciary Committee Chairman Jerrold Nadler, D-N.Y..


First Panel:

The Honorable Doris Matsui, Member of Congress
The Honorable Judy Chu, Member of Congress
The Honorable Tammy Duckworth, United States Senator
The Honorable Grace Meng, Member of Congress

Second Panel:

John C. Yang, Esq., President & Executive Director, Asian American Advancing Justice – AAJC
Manjusha P. Kulkarni, Esq., Executive Director, Stop AAPI Hate, Asian Pacific Policy and Planning Council
Erika Lee, PhD., Regents Professor of History and Asian American Studies, Director, Immigration History Research Center, University of Minnesota
Charles Lehman, Fellow, Manhattan Institute, and Contributing Editor, City Journal
Wencong Fa, Esq., Attorney, Pacific Legal Foundation
Daniel Dae Kim, Actor and Producer
Shirin Sinnar, Esq., Professor of Law & John A. Wilson Faculty Scholar, Stanford Law School
Hiroshi Motomura, Esq., Susan Westerberg Prager Distinguished Professor of Law, Faculty Co-Director, Center for Immigration Law and Policy, UCLA School of Law