The Fed’s Favorite Wall Street Firm

Conflict of interest, anyone? In addition to managing $1.3 trillion of its private clients’ funds, money manager BlackRock is a government adviser, helping with the rescues of Bear Stearns, Citigroup, and AIG, running a Federal Reserve program to reboot the housing market, and helping to evaluate Fannie Mae and Freddie Mac. “BlackRock has become so ubiquitous that some lawmakers, federal auditors and watchdog groups are now asking if the firm does too much, and if its roles as government adviser, giant federal contractor and private money manager will inevitably collide,” writes The New York Times. “The potential for a conflict of interest is great and it is just very difficult to police,” said Senator Chuck Grassley. Writes the Times, “Without naming BlackRock, federal auditors have warned that any private parties that purchase distressed assets on the government’s behalf could use generous federal subsidies to overpay, artificially pushing up the price of similar assets that they manage for their own portfolios.”