BLACKROCK is facing a new demand from a top US regulator over its stakes in banks after the asset manager failed to meet a January deadline and pushed to delay talks into the Trump administration.
The Federal Deposit Insurance Corporation (FDIC) granted a fresh deadline of Feb 10 to resolve an issue regarding oversight of the firm’s stakes in banks, according to three sources with knowledge of the matter.
The FDIC may begin an investigation into the firm and demand more information from BlackRock if it does not make enough progress towards resolving the issues, the sources said. That may include the FDIC issuing a subpoena to the firm and lead to more compulsory actions, one of the sources said.
Representatives for the firm and the bank regulator declined to comment.
The move by the FDIC follows a Jan 10 deadline the firm ultimately did not meet.
Instead, it requested an extension until at least Mar 31 in a letter to the agency, saying it had only two weeks to review a proposed pact that risks hurting its ability to serve clients.
The FDIC denied that request in a follow-up correspondence that also outlined various additional asks around BlackRock’s decision-making and other documents related to the firm’s bank holdings, according to sources with knowledge of the matter.
BlackRock has argued the plan would upend index funds that dominate many investor portfolios and make it more costly for banks to raise capital. It has also said the FDIC should coordinate any new scrutiny with the Federal Reserve, which already has a passivity agreement in place with the firm.
FDIC board members Jonathan McKernan, a Republican, and Rohit Chopra, a Democrat and director of the Consumer Financial Protection Bureau, have pushed repeatedly for more oversight of large asset managers, arguing their size and concentrated ownership could give firms undue influence over the management and strategy of US banks. BLOOMBERG
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