Capital Calls Archegos helps BlackRock SIFI case

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NEW YORK, March 30 (Reuters Breakingviews) - Concise insights on global finance in the Covid-19 era.


BLACKROCK’S DELIGHT. Nobody in financial markets really likes to see a meltdown like Archegos Capital Management’s over the weekend read more . But the implosion of Bill Hwang’s family office – essentially a private hedge fund – is nonetheless handy ammunition for BlackRock (BLK.N).

Larry Fink’s $8.7 trillion asset manager has long argued it isn’t significantly risky for the financial system despite its massive size. Rather, BlackRock reckons regulators should worry about individual funds, such as Archegos. Wall Street scourge Senator Elizabeth Warren isn’t convinced, asking last week whether Fink's company should be designated a systemically important financial institution read more .

In its defense, BlackRock can point to several historical debacles involving individual hedge funds that borrowed too much, like the collapse of Long-Term Capital Management in 1998. With Archegos, which couldn’t meet margin calls on highly leveraged contracts relating to stocks like ViacomCBS, there's an example that’s bang up-to-date. The fund's woes forced sales by counterparties, landing Credit Suisse, Nomura and others with big losses . That’s what you call systemic. (By Richard Beales)

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Edited by Lauren Silva Laughlin and Amanda Gomez

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