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BlackRock and the Federal Reserve: A Love Affair

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Napoleon Bonaparte once quipped that “quantity has a quality all its own.”

He said that about his 700,000-man army, but it’s just as true for the $10 trillion investment firm BlackRock and its best friend, the Federal Reserve.  On the latest episode of the Drill Down podcast, Peter Schweizer and Eric Eggers explore the murky, but lucrative, intersection of public-private partnerships by looking at one of the most valuable companies on Earth: BlackRock.

BlackRock has two main organizational arms: one that manages its various exchange-traded funds (ETFs) and another that works with the Federal Reserve on mortgage securities, ETFs, and corporate bonds, among other things, to mitigate the economic fallout of the COVID-19 pandemic. But these two arms embrace the Fed’s policies first by facilitating them with one arm and then capitalizing on those policies with the other. This arrangement, pointed out by Bloomberg, shows just how blatantly cozy, Big Business can be with Big Government.

For example, when the Fed made the decision to purchase a slew of ETFs in the early stages of the pandemic, half were BlackRock ETFs. To be fair to BlackRock, they agreed to not charge the Fed the typically costly advisory fees; but to be fair to the taxpayer, BlackRock made out like a bandit from the Fed deal. Within a week after the deal was announced, and months before the Fed purchased BlackRock ETFs, one popular fund saw over $8 billion flow in from investors.

But BlackRock’s ties with the government are not just profitable, they are personal.

BlackRock’s former investment executive, Brian Deese, is now President Biden’s head of the National Economic Council. And the firm’s former global chief investment strategist, Michael Pyle, is currently Vice President Harris’ chief economic advisor.

Maybe Biden’s economic agenda could more aptly be described as Building BlackRock Better.