BlackRock Inc. (‘BlackRock’) is an American global investment management corporation, that was founded in 1988 and is based in New York City.
Although rarely in the news, recently BlackRock has been subject to increased criticism over their practices of buying up property and the way BlackRock entities have populated Biden’s administration. Furthermore, many have also started to scrutinize BlackRock for allegedly taking advantage of its close ties with the Federal Reserve System during the coronavirus pandemic response efforts, when in March 2020 the Federal Reserve chose BlackRock to manage:
Two corporate bond-buying programs in response to the coronavirus pandemic:
The US$500 billion Primary Market Corporate Credit Facility; and
The Secondary Market Corporate Credit Facility.
As well as the purchase by the Federal Reserve System of commercial mortgage-backed securities guaranteed by Government National Mortgage Association, Federal National Mortgage Association, or Federal Home Loan Mortgage Corporation.
Some like Democrat Senator Elizabeth Warren have begun suggesting that Blackrock should be considered 'too big to fail.' While others, such as US Representatives Katie Porter and Jesús García, have proposed a bill to Congress aiming to restrain BlackRock and other so-called shadow banks from their reach.
Before we break down BlackRock's close ties with the Democrat party, and in particular their connections with the Obama & Clinton Administration, as well as the Biden's, we will provide a brief introduction into BlackRock's activities, history, values and past dealings.
BLACKROCK OVERVIEW
BlackRock initially started as a risk management & fixed income institutional asset manager, and now is the World's largest asset managers with with US$8.67 trillion in assets under management as of January 2021. BlackRock also has a large international reach, and operates globally with 70 offices in 30 countries, and clients in over 100 countries.
World's Largest Shadow Bank...
BlackRock has been called the World's largest Shadow Bank, due to its power, coupled with the sheer size & scope of its financial assets & activities. However, despite its large size, BlackRock has managed to stay somewhat under the radar.
BlackRock & the issue of Transparency...
BlackRock's chain of ownership is similar to circular ownership structures which have been identified in the United Kingdom, whereby BlackRock is a shareholder in many institutional investors that own shares in BlackRock. This has led to problems with transparency and accountability.
BlackRock has also had a speckled past, with links to corruption and market manipulation. For example, on July 2014, it was reported that BlackRock had been fined for market manipulation over their UniCredit stake, and on 8 November 2018, it was reported that German police were raiding BlackRock offices over corruption. Furthermore, by May 2020, The European Ombudsman opened an inquiry to inspect the Commission's file on the European Commission's decision to award a contract to BlackRock Investment Management to carry out a study on integrating environmental, social and governance risks and objectives into EU banking rules ('the prudential framework') - citing concerns over impartiality.
Another major issues that ties to transparency, is BlackRock's habit of stating their values or objectives, while at the same time continuing to act in ways counter to their words. To give a couple examples, BlackRock frequently takes popular stances on social issues like war and the environment while acting in a completely opposite manner to the way in which they preach.
Anti-war Stance...
Since 2018 in particular, Anti-war organizations have been discontent with BlackRock, pointing out, their hypocrisy in their stances and actions, e.g. talking on social responsibility while BlackRock remains the largest investor in weapon manufacturers through its iShares U.S. Aerospace & Defense ETF.
Another example is regarding Global Warming and Environmental sustainability,
BlackRock as a Sustainable Investor...
BlackRock's attempts to model itself as a sustainable investor seem for appearance only. Note, as of December 2018, it has been reported that BlackRock was the world’s largest investor in coal plant developers, holding shares worth US$11 billion among 56 coal plant developers. For 2018, BlackRock owned more oil, gas, & thermal coal reserves than any other investor with total reserves amounting to 30% of total energy-related emissions from 2017 (9.5 gigatonnes of CO2 emissions).
In September 2018, BlackRock was also under fire for backing Brazil’s JBS, with Global Witness criticising fund groups, like BlackRock, for investing in a company accused of aiding deforestation. Concerned about global warming, environmental groups including the Sierra Club, and Amazon Watch launched a campaign called BlackRock's Big Problem. In this campaign, these groups assert that BlackRock was the 'biggest driver of climate destruction on the planet', due in part to its refusal to divest from fossil fuel companies.
In BlackRock's CEO & Founder - Laurence Fink's - 2020 annual open letter, he announced environmental sustainability as core goal for BlackRock's future investment decisions.
On 14 January 2020, BlackRock's CEO declared, in their 2020 annual open letter, that environmental sustainability would be a key goal for investment decisions, as it had suggested before. However, this time BlackRock announced that it would also sell US$500 million worth of coal-related assets. Sadly, while for many climate advocates this may seem like a victory, BlackRock's has countered their actions with a decreased desire for transparency. In fact, BlackRock's support for shareholder resolutions requesting climate risk disclosure fell from 25% in 2019 to 14% in 2020 according to Morningstar Proxy Data.
This secrecy should be concerning given BlackRock's history of corruption, price manipulation and hypocrisy. Furthermore, the timing to do this with US' economy stalling seems detrimental to the nation. Especially when considering polluters like China still emit more greenhouse gas than the entire developed world combined, a new report has claimed, with the research by Rhodium Group saying that China emitted 27% of the world's greenhouse gases in 2019. Dumping all these stock will drive the price down, but will China cease use or just capitalise on this price change.
Potentially devastating ones own economy and making a nation energy dependent seems suspect, especially given BlackRock's past dealings and close ties to the Chinese Communist Party ('CCP'').
BlackRock & the CCP
BlackRock and key members, like with Joe Biden and the Democrat party, have a very close relationship with the CCP. In fact, in August 2020, BlackRock received approval from the China Securities Regulatory Commission to set up a mutual fund business in the country. This makes BlackRock the first and only global asset manager to get consent from China to start operations such as this.
Now we have a brief background into BlackRock let's look at the connection between Democrat Joe Biden's Administration, and also former Democrat President Barack Obama's Administration, and BlackRock.
BLACKROCK & THE BIDEN ADMINISTRATION
The world’s biggest fund manager, BlackRock, has become an increasingly influential player in Washington, DC. The list below includes some examples of BlackRock ties to Washinton's ruling administrations.
Brian Deese ('Deese')
BlackRock
Deese served as the Global Head of Sustainable Investing at BlackRock.
President - Joe Biden
Under Joe Biden Deese serves as Director of the National Economic Council - effectively as Biden’s top advisor on economic matters.
Former President - Barack Obama
Deese also served as a Senior Advisor to President Obama.
Earlier within the Obama Administration, Deese served as the Deputy Director & acting Director of the Office of Management and Budget.
Adewale Adeyemo ('Adeyemo')
BlackRock
At BlackRock Adeyemo previously served as a Senior Advisor.
Prior to that Adeyemo served as interim Chief of Staff for the BlackRock's CEO, Laurence D. Fink.
President - Joe Biden
Under Biden Adeyemo serves as the Deputy Secretary of the Treasury.
Former President - Barack Obama
Adeyemo was the first President of the Obama Foundation and also served during the Obama administration as:
Deputy National Security Advisor for International Economics from 2015 to 2016; and
Deputy Director of the National Economic Council.
Michael Pyle ('Pyle')
BlackRock
Pyle was BlackRock’s global chief investment strategist.
He worked in the Obama administration before joining BlackRock.
Vice President - Kamala Harris
Pyle, is Chief Economic Advisor to Kamala Harris.
Former President - Barack Obama
Pyle worked in the Obama administration before joining BlackRock,
He was a special assistant to the president on economic policy matters and also worked in the Treasury Department and the Office of Management and Budget.
Thomas Donilon ('Donilon')
BlackRock
Donilon, is now BlackRock’s Chairman of the asset manager’s research arm.
President - Joe Biden
Donilon’s brother, Mike, was Biden’s Chief Strategist during his presidential campaign.
Former President - Barack Obama
Donilon previously served as National Security Advisor to Obama.
LOBBYING FOR HILLARY CLINTON
BlackRock has not just bee involved with the Biden and Obama Administration, they also lobbied hard for Hillary Clinton in her Presidential bid and hoped to use her as a ticket to Washington according to reports. See e.g.
Prior to Hillary's loss in the Presidential election...
21 January 2014, Fox News, 'BlackRock's Fink Hoping Hillary is Ticket to Treasury Post'
After Trump claims victory in the Presidential race.
9 December 2016, Financial Times, 'Can BlackRock keep the line to Washington open?'
However, the ties between BlackRock and the democrats may run deeper still. In the next section, we will explore BlackRock's CEO and his fraternity Kappa Beta Phi ties to other key players.
LARRY FINK & KAPPA BETA PHI
BlackRock was founded and is run by a Kappa Beta Phi ('KBΦ') member – Laurence 'Larry' D. Fink ('Fink').
In 1988, Robert S. Kapito left FirstBoston along with Fink and founded BlackRock under the umbrella of the private equity firm Blackstone Group where they joined as partners. In 1992, BlackRock was spun out from Blackstone and became an independent company.
As a re-cap we know BlackRock members populated former President Obama's administration and made a bid to have Hillary Clinton elected. We also know that, for example, under the Biden Administration, Black Rock's Global Head of Sustainable Investing is set to head Biden’s National Economic Council, and a former advisor to BlackRock's CEO, Fink, will serve as a top official at Treasury, among other entitles.
Now let's look at how the following fraternities relate to the above.
Kappa Beta Phi & Phi Beta Kappa
The organization's name, Kappa Beta Phi ('KBΦ') is a reversal of Phi Beta Kappa('ΦBK'). By way of background, Kappa Beta Phi, inducts about 15 to 20 new members each year - and historically, the organization has inducted top executives of various Wall Street firms.
Why does this matter...
Well this will be clear when we look at some of the members, and in particular members of Kappa Beta Phi's reverse name sake, Phi Beta Kappa, that was started over a hundred years prior at the same College (William & Mary).
Phi Beta Kappa boasts BlackRock linked members like Bill Clinton, but also members such as Ben Bernanke & Henry Paulson who as we will explain, like BlackRock played a major role in the Global Financial Crisis ('GFC') and the bailout of the financial sector.
Below we will give a quick introduction to the Phi Beta Kappa fraternity.
Phi Beta Kappa Overview
Phi Beta Kappa has an illustrious history. Since its inception in 1776, it has inducted members which have included the following:
17 United States (‘US’) Presidents
40 US Supreme Court Justices
136 Nobel Laureates
Note that 17 Presidents is A LOT given that:
The group was formed in 1776 while many were in college; and
The average age of Presidents is 50+.
This figure also excludes other fraternities connected to Phi Beta Kappa.
This group dominates judiciary & academia too, not just the executive!
Assuming each of the 17 US Presidents since 1776 were only elected for:
One 4-year term: ~28% of US Presidents were from ΦΒΚ, or 1 out of every ~3.57.
Two 4 year terms: ~56% of US Presidents were from ΦΒΚ, or 1 out of every ~1.79.
Prominent members of ΦΒΚ include:
Jeff Bezos (1986)
Bill Clinton (1968)
Condoleezza Rice (1974)
Jeb Bush (1973)
Ben Bernanke (1975)
Furthermore, Phi Beta Kappa's linked fraternity Kappa Beta Phi has a tight history with Wall street as noted, the following list includes examples of prominent members of this fraternity.
Prominent members of Kappa Beta Phi
FINANCIAL REGULATION & POLITICAL INFLUENCE EXAMPLES
Wilbur Ross – United States Secretary of Commerce
NY STOCK EXCHANGE
Richard Grasso – former head of the New York Stock Exchange
Kenneth Langone – former chair of the New York Stock Exchange compensation committee
SUPERINTENDENT OF BANKS
Diana Taylor – former New York State Superintendent of Banks
TREASURER
Robert Rubin - former U.S. Treasury Secretary, former co-chair of Goldman Sachs
GOVERNORS & MAYORS
Jon Corzine – former New Jersey Governor
Michael Bloomberg – former New York City mayor
SEC
Mary Shapiro – former chairperson of the Securities and Exchange Commission
FEDERAL RESERVE
John C. Whitehead – former chair of Goldman Sachs & Co. He was Chairman at of the Board of the Federal Reserve Bank of New York, United Nations Association, & Andrew W. Mellon Foundation
GFC RELATED INDIVIDUAL & COMPANY LEADERS
Laurence D. Fink – CEO of BlackRock
James Cayne– former CEO of Bear Stearns
Alan Schwartz – former president of Bear Stearns
Richard S. Fuld Jr. – former chair and CEO of Lehman Brothers.
OTHER NOTABLE MENTIONS
Nigel MacEwan - former CEO of Kleinwort Benson North America, former president of Merrill Lynch
David Komansky– former CEO of Merrill Lynch
Sallie Krawcheck– former head of Citigroup's wealth management division
Marc Lasry - CEO of Avenue Capital Group
Martin Lipton – founding partner of Wachtell, Lipton, Rosen & Katz
Warren Stephens – CEO of Stephens Inc.
Sanford Weill – former CEO of Citigroup
John C. Whitehead – former chair of Goldman Sachs & Co.
But what kind of fraternity is Kappa Beta Phi? Maybe they simply seek and find excellence? Maybe they earned their position through work? Well let's have an inside look.
Inside look into Kappa Beta Phi..
In 2012, Kevin Roose crashed the party of Kappa Beta Phi. He wrote an article ‘One-Percent Jokes and Plutocrats in Drag: What I Saw When I Crashed a Wall Street Secret Society’ about his experience.
Including his witnessing of:
Speeches about the founding of the group
Drag dressing
Singing the parody Book of Mormon
The opening speech where Wilbur Ross explained the formation of the society
Founding Story of Kappa Beta Phi
According to Wilbur Ross’ opening speech, Kappa Beta Phi was founded in 1929.
Per Kevin Roose's recount of Ross' Opening speech:
The fraternity was started by ‘Four C+ students at William and Mary.’
‘The Wall Street contingent was founded in 1929, just before the stock market crash, later taking on the aim of keeping alive the spirit of those good old pre-depression days, when fat cats grew ever fatter, seemingly immune to whatever economic struggles dominated the lives of the unfortunate masses. By all appearances, Kappa Beta Phi has been a smashing success.’
Kevin Roose after crashing the event notes the following:
The fraternity’s name is a play on that of the honour society Phi Beta Kappa.
‘An odd wrinkle here, then, is that those elites who most champion the notion of American meritocracy, who insist that whoever works hardest and produces the most value in our society reaps its greatest rewards, all belong to a club whose founding ethos was disdain for fey over-achievers, in favour of macho hedonism.’
Furthermore, rather than being an honour society or place of ethics, according to Wikipedia, by the 1930s the fraternity’s original, non-Wall Street chapters were the bane of many campus presidents, who sought to abolish clubs 'characterized as … solely for drinking and partying while making a mockery of academics.'
This brings us to a brief look at the GFC and the role of fraternity members in creating and rescuing the Banks that created it.
THE GFC, KBΦ & ΦBK
First, what caused the GFC? This is a complex topic and not the subject of this article, but it seems accepted that the securitization of subprime mortgages into mortgage-backed securities and collateralized debt obligations was a major contributing factor in the subprime mortgage crisis, known as the GFC.
An important question then - is what role did BlackRock and these fraternities have in creating and resolving the crisis?
BlackRock Founders & The Subprime mortgage crisis...
Laurence D. Fink met Robert Kapito, at First Boston where they were instrumental in pioneering the mortgage-backed security market in the US. This would be a lead cause in the oncoming GFC.
Importantly, BlackRock's Fink, was not the only Kappa Beta Phi member involved in the onset of the GFC and the subsequent bank rescue. Note the following examples of individuals who were involved in the GFC and its bailout and were also KBΦ Members.
Laurence D. Fink – CEO of BlackRock
James Cayne– former CEO of Bear Stearns
Alan Schwartz – former president of Bear Stearns
Richard S. Fuld Jr. – former chair and CEO of Lehman Brothers.
Phi Beta Kappa the linked fraternity also had members who played a major role.
Phi Beta Kappa's Role...
As mentioned before Bill Clinton was a Phi Beta Kappa member, and so were many other important figures. For example, Ben Bernanke who was head of the Financial reserve during the GFC, was also a Phi Beta Kappa member, and was criticized for his generous bail out plan for banks. Furthermore, Henry Paulson who was 74th US Secretary of the Treasury from 2006-2009, and was also a CEO of Goldman Sachs, was a Phi Beta Kappa Member and charged with handling the GFC with Bernanke.
There's a lot more that could be explored here, which isn't the purpose of this article. However, against this backdrop it makes sense that BlackRock was recently scrutinized for allegedly taking advantage of its close ties with the Federal Reserve System during the coronavirus pandemic response efforts, as this really seems to be an ongoing trend.
In the next section we discuss briefly secret societies, and control through blackmail, as it relates to some of the members and fraternities we just discussed.
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