LONDON, March 25 (Reuters Breakingviews) - Concise insights on global finance in the Covid-19 era.
SIZE MATTERS. Senator Elizabeth Warren asked U.S. Treasury Secretary Janet Yellen on Wednesday whether BlackRock (BLK.N) should be designated a systemically important financial institution read more . The tag would mean tighter regulation and financial restrictions for Larry Fink’s asset manager.
Yellen demurred, saying systemic risks merited scrutiny but the SIFI designation, used for giant banks, might not fit. The $8.7 trillion managed by BlackRock is clients’ money, not its own; its funds are self-contained and, in theory, can be hived off to other managers; and the company’s capital is not at risk from funds’ performance.
These and other realities suggest watchdogs should worry about individual funds that become enormous and use leverage rather than applying the blunt-force SIFI tag to BlackRock as a whole. Still, problems at one fund could damage the reputation of many, and decisions at BlackRock unquestionably matter to markets. For politicians, Fink’s behemoth is too big to ignore . It’s not hard to imagine them deciding it’s also too big to fail. (By Richard Beales)
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