US economic command tower vs Wall Street grim reaper…

The US economic command tower collided with the “Wall Street grim reaper”. It’s about US Treasury Secretary Janet Yellen and Democratic Senator Elizabeth Warren. At the Senate Banking Committee hearing held online on the 24th (local time), the two argued over whether or not to oversee Blackrock, the world’s largest asset manager.

According to CNN and Bloomberg, Congressman Warren asked Secretary Yellon that day, “Will the Financial Stability Supervisory Commission (FSOC) under the Ministry of Finance consider designating Black Rock as a possible threat to the financial system?”

“It is important to carefully look at the risks posed by the wealth management industry, including Black Rock,” said Minister Yellen. “Rather than focusing on company designation, it is important to focus on activities (threatening the financial system) and regulate appropriately. It’s important to consider what is.”

Then Warren pressed Yelon. He said, “If an investment company that manages $9 trillion (about 1220 trillion won), which is more than the annual gross domestic product (GDP) of any other country in the world except the United States and China, falls, will it have a significant impact on the US economy? “How can we analyze what risks there are if we don’t investigate through this?”

“It is appropriate to designate an institution (for FSOC management) that will pose a significant risk to US financial stability if a problem arises,” said Yellen. “Asset managers are very different from large banks that are supervised by the Federal Reserve System (Fed). It’s different.” He then confronted him, saying, “It is not clear to me that designation is the correct means.” He started working on the FSOC issue, and said that asset management would be on the list.

Since the 2008 global financial crisis, the US has established FSOC under the Dodd-Frank Act to designate banks that can threaten the financial system to monitor financial activities. It targets banks with assets of 50 billion dollars or more. Blackrock’s asset size exceeds the standard applied to banks 180 times, but it was not included in the management target, not bank.

Regarding this, Aziznayan Blackrock spokesman said in an e-mail statement on the day that “the past two administrations and numerous global regulators in the United States have studied our industry for 10 years and have concluded that asset managers must regulate differently from banks.” “We should focus primarily on products and services,” he said.

Bloomberg said the FSOC had already overseen certain activities during the former Donald Trump administration, rather than putting certain companies under control. In response, Democrats, like Warren, who argue that the financial sector needs strong regulation, have criticized the FSOC for giving up its most powerful tools.

Bloomberg also pointed out that Black Rock officials have advanced to senior positions in the Joe Biden administration. Treasury Secretary Wally Adejemo was the secretary of Larry Pink Black Rock Co-Founder and Chief Executive Officer. Brian Dee, Chairman of the National Economic Commission (NEC), served as Black Rock’s Global Head of Sustainable Investments. Mike Pyle, former Black Rock’s chief investment strategist, serves as chief economic adviser to Vice President Kamala Harris.

Reporter Seungho Lee [email protected]