The revolving door between Washington and Wall Street always elicits emotional objections from progressive good governance groups — except, it seems, when it involves corporate wake-ups.
For proof, all you have to do is dismantle the Biden administration’s so-called environmental social management agenda and its ties to BlackRock, the world’s largest money management company headed by Larry Fink, which manages more than $9 trillion in assets.
BlackRock has been an active fan of White House policy toward ESG — the practice of urging industries to enact climate control measures and adopt other rules such as board diversity as part of their business models — and to capitalize on it without attracting too much attention from the usual suspects.
Since his campaign days, Joe Biden has made no secret that he wants more government in the economy. Now that he’s president, Biden’s Securities and Exchange Commission is no longer intent on simply protecting small investors from financial fraud; It now wants to reverse climate change by imposing ESG standards on all public companies that require disclosure of their carbon footprint.
Corporate governance used to focus on what companies could do to generate long-term profits. not longer. The Treasury Department’s Financial Stability Oversight Board recently identified “climate change as an emerging and growing threat to the financial stability of the United States.”
It doesn’t end there. Biden’s Department of Labor is now proposing a new rule that would force 401(k) companies and their sponsors to include investments that adhere to ESG standards. To make way for ESG’s new offerings, top performing funds will take a back seat to funds that stick to wake-up mandates.
Once again, the revolving door is nothing new; Big companies are always looking for ways to shape government policy in ways that serve their self-interest. What differs here is how much of a role people associated with Larry Fink’s BlackRock have played in shaping national ESG policy, and how much the company benefits with just a peep from this aforementioned crowd.
For those who don’t know Fink, he is one of the most amazing, powerful, and awakened personalities on Wall Street. His firm manages money for individuals, businesses, and governments around the world, as well as managing the Federal Reserve’s massive debt portfolio since the 2008 financial crisis.
Fink is a billionaire, and his success has enabled him to become a key player in the Democratic Party. And he wasn’t shy about spreading BlackRock’s influence to advance democratic economic causes in ways that happen to support the bottom line.
Last year, he wrote a famous open letter threatening to push for the removal of board members of companies in which BlackRock invests if they refuse to follow the progressive line on climate change.
Most recently, he pledged to make ESG a cornerstone of BlackRock’s investment model. As Fox Business’ Eleanor Terrett reports, BlackRock now offers more than 150 mutual funds and exchange-traded funds (investment pools that trade like stocks) that adhere to ESG standards — more than any other company on Wall Street.
BlackRock manages more than $400 billion in ESG client funds, which means it makes money with the fist of being an environmentally conscious corporate citizen because, according to Terrett, these funds can carry 40 percent more fees than other similar investments. (BlackRock responded that its ESG ETFs are cheaper.)
In the meantime, Fink has some significant help in developing a profitable ESG investment model. As it turns out, the Biden administration is filled with ex-BlackRock people doing the same on a national organizational level.
Take Brian Dees, the current chair of the National Economic Council. He was Fink’s Global Head of Sustainable Investment. Or take Deputy Treasury Secretary Wali Adeemo. He was formerly Fink’s chief of staff and a senior advisor to Treasury Secretary Janet Yellen, who plays a key role in driving the national ESG.
There are other Black Rock people who serve in the Biden administration and have more casual but powerful relationships nonetheless. Among them is Michael Bale, a former chief global investment analyst at BlackRock. He is now Senior Economic Adviser to VP Kamala Harris. Then there’s Tom Donilon, president of the BlackRock Investment Institute. His brother, Mike Donilon, is Biden’s senior adviser and chief campaign strategist.
The White House did not return calls for comment. “Climate risk is an investment risk. We believe reducing the impact of climate change is better for the economy and will lead to higher growth,” BlackRock said in a statement. For his part, Fink might truly believe that climate control is necessary for humanity to survive. Deese, who owned $2.4 million in BlackRock stock, according to a recent White House disclosure, may also be pushing for government policies without thinking twice about how to profit from his old company.
But appearances matter. And the appearance of a revolving door between BlackRock and the White House deserves further scrutiny.