July 24, 2021

Larry Fink, CEO of BlackRock, from trader with new conscience on Wall Street

He does not have the popularity of billionaire Warren Buffett but his influence is immense: Larry Fink pilots Blackrock, a financial monster of 7.000 billion dollars entrusted by individuals, pension funds or unions.

At 67, this father of three children, still dressed to the nines, wants to use his power to write the breviary of new capitalism while boasting of healing the wounds caused by the old, such as the deepening of social inequalities and the pauperization of the most fragile.

“To prosper over time, any business must not only produce financial results, but also show how it makes a positive contribution to society,” he advocates, in January 2018, in his traditional annual letter to bosses.

On Tuesday, Mr. Fink pledged to make Blackrock a leader in sustainable and responsible investments, in an attempt to respond to criticisms of double play from NGOs.

The progressive image of this important donor of the Democratic Party in the United States contrasts with France, where Blackrock finds himself accused, by opponents of President Macron’s pension reform, of wanting to impose a funded pension scheme.

The categorical and repeated denials of the company, which is not a pension fund and does not offer retirement savings plans, do nothing. BlackRock does not however hesitate to give its analysis on the laws likely to affect the money of its clients, as in this case.

– “Hypocrite” –

Mr. Fink, a partly bald head and thin glasses, has the straightforward talk that sets him apart from other CEOs in Donald Trump’s America, bitterly divided on immigration, guns or climate change.

NEW YORK, NY – American journalist Andrew Ross Sorkin, seen here left interviewing BlackRock CEO Larry Fink at the New York Times DealBook conference on November 12, 2013 in New York City, believes it is an atypical boss (GETTY IMAGES NORTH AMERICA / AFP – Larry Busacca)

“Larry Fink is ready to tackle controversial social and political subjects that most of the big bosses want to avoid at all costs,” said Andrew Ross Sorkin, star reporter for the New York Times and CNBC, to AFP.

It doesn’t matter whether the US economy still runs on fossil fuels or whether some of its customers live in regions where climate-skeptics flourish, he recently threatened to oppose directions with little sensitivity to sustainable development. He has the means to be heard: BlackRock is a shareholder of ExxonMobil and Chevron.

For billionaire Samuel Zell, Larry Fink is “extraordinarily hypocritical”.

“When you use people’s money to promote a point of view with which they might disagree, it is crossing the red line”, for his part castigates Charles Elson, specialist in governance issues at the University of Delaware.

– De Black Monday à Blackrock –

Larry Fink co-founded BlackRock with another titan of American finance, Stephen Schwarzman, in 1988, almost a year after “Black Monday”, the day of October 19, 1987 when Wall Street collapsed.

The goal is not only to invest other people’s money but to give them sophisticated tools to manage it.

BlackRock has created a risk assessment system called Aladdin, which is thousands of computers that monitor and examine every financial product to determine how it might be affected by events of all kinds.

Seduced, the American authorities will turn to Larry Fink during the 2008 crisis to assess and help administer the toxic assets of companies over which the federal government has taken control.

BlackRock will thus watch over the 130 billion dollars of rotten assets of the bankrupt insurer AIG and the 1,200 billion dollars of financial products backed by mortgages of the mortgage refinancing agencies Fannie Mae and Freddie Mac.

– More powerful than Bolloré –

Larry Fink “is one of the most powerful men on Wall Street,” said William Cohan, a former investment banker. “Imagine when Vincent Bolloré was in the sky. Larry Fink is 100 times more powerful than that”.

“He controls a lot of businesses, a lot of jobs and a lot of businesses,” Cohan says.

BlackRock, which manages $ 7.429 billion in assets, owns shares in all CAC 40 companies.

The CEO of a large American bank told AFP that he could not comment on Larry Fink because he was expected to ask for his support soon in order to keep his post.

Yet Mr. Fink had a long journey through the desert.

Freshly graduated from the University of California (UCLA), he began his career on Wall Street in 1976 at the investment bank First Boston.

He is then responsible for designing the financial products backed by mortgage loans. Legend has it that he developed, with another trader, Lewis Ranieri, the debt securitization market, used by traders to fabricate the subprimes that caused the 2008 financial crisis.

This collector of American popular art then experienced a meteoric rise, but the fall was just as spectacular.

In 1986, he speculated on an interest rate hike, but the reverse happened. The losses are colossal. Fallen out of favor, Mr. Fink left the firm two years later.

This exit is, with the purchase of Lehman Brothers shares, three months before the bank’s resounding bankruptcy, and the bankruptcy in 2010 of a New York residential apartment complex, bought at a high price, one of its most big failures.

Mr. Fink declined AFP’s solicitations but his entourage responded by e-mail and telephone to questions.