The Most Powerful Company You Never Heard Of

The BlackRock sign outside their main office building in New York
(Via: Wikimedia) https://creativecommons.org/licenses/by/2.0/deed.en
The BlackRock sign outside their main office building in New York (Via: Wikimedia) https://creativecommons.org/licenses/by/2.0/deed.en
Russavia

According to Jake Tran, BlackRock is a company that oversees $21 trillion via their AI, and it has over $9 trillion in public financial assets. It is one of the top shareholders in many of the top companies on the planet, including Apple, Microsoft, Amazon, Google, Tesla, J.P. Morgan, and Meta. Where did this company come from, and how much influence do they really have?

The Most Influential Financial Institution in The World

Back during the 2008 financial crisis, the Government had to bailout big financial institutions like Barry Stearns, AIG, Fannie Mae, and Freddie Mac. The government hired BlackRock to analyze and clean up the mess. BlackRock is led by Larry Fink, a billionaire who is regarded as the “guy who always wanted more than he had”, says one unknown former First Boston partner.

BlackRock was chosen specifically to assist in the financial crisis without any competition, in which the whole situation was enveloped in secrecy. They were one of the top shareholders in all the banks they were hired to help out, meaning that they were essentially giving money to themselves. Due to this loophole, Larry Fink rose to be the most powerful man in the post 2008 economy.

Then, during the 2020 pandemic, the central bank of the U.S. began buying corporate debt ETFs to help recuperate the economy. To manage this scheme of buying corporate bonds, they went to BlackRock. And once again, the same corporations in which BlackRock owned the biggest stakes in, were also the ones Blackrock was hired by the government to bail out. After both 2008 and 2020, BlackRock solidified their dominance in the market.

BlackRock is now the largest asset manager in the world. These assets arise in the form of pension funds, sovereign wealth funds, other central banks, college endowment, and millions of individual investors. A former investment banker, William Cohan, states that “He’s like the Wizard of Oz, the man behind the curtain” when referring to Larry Fink.

In 2010, BlackRock was already called “The Most Influential Financial Institution in the World”, and in 2014, they became the world’s biggest asset manager with $4 trillion in assets under management.

If that was not enough, in 2020, they were approved by the Chinese government to set up a mutual fund in China, making BlackRock the first foreign asset manager to be allowed to do so. They also have shares in companies all over Europe, including energy like oil and gas, transportation, food, and finance.

Larry Fink and His Rise To Power

Larry majored in political science at UCLA, then went into Wall Street at age 23. His background in political science played a crucial role in him becoming the de-facto middleman between Washington and Wall Street. Obsessive, and paranoid about maintaining control, he possesses an in-depth knowledge of the market and a comprehensive understanding of business. He received offers from some of the top investment banks, but then decided on First Boston, where he worked on structuring and trading bonds.

Larry then became somewhat of a legend in Wall Street by helping develop the debt securitization market, in which loans such as car loans, credit card loans, and mortgages would be bundled together, sliced into pieces, and sold to other investors. The same mortgage-backed securities that led to the 2008 meltdown.

But before this happened, this securitization of debt was considered innovative and it transformed the face of finance. If you were a giant bank, pension fund, or someone with interest that wanted to invest in the housing market, you could now invest in a mortgage-backed security made up of thousands of hopefully safe loans.

Larry Fink created one of the main tools that led to the meltdown, and also the tool that the U.S. treasury hired him to clean up. He gained a reputation for a true investment mastermind. Larry got rich, and received many awards; such as World’s Best CEO as an example. At age 31, he became First Boston’s youngest managing director in history. Many thought he would run the firm someday, as he helped add about a billion dollars in assets to First Boston’s bottom line.

Hitting Rock Bottom

However, things changed for Larry. He lost around a hundred million dollars for his company, in which a missed call on his hand resulted in trades being wiped out, as well as the hedges designed to offset those losses being erased. Overnight, Larry went from a hero to a toxic asset. He was ostracized, his reputation destroyed, and he was forced out of the company he made around a billion dollars for.

He then used this as ammunition, vowing to never find himself in a position where he didn’t understand risk again. At 35, he was determined to reboot his career. In 1988, Larry co-founded the BlackStone Group with Steven Schwartzman, they started the company with a 5 million line of credit. In 1993, they were crushing it with 20 billion dollars under management.

Then in a power struggle, Larry and Steven broke off, in which Larry went off and founded BlackRock. In 1999, it went public for 375 million dollars. In 2004, it merged with Merrill Lynch, adding half a trillion dollars to BlackRock’s assets, today blackrock alone manages over 9 trillion dollars directly.

Artificial Super-Intelligence

What really sets BlackRock apart is their software platform called Aladdin, which is a combination of super computers they use to help their clients. Aladdin is a network of 5,000 computers used to monitor millions of trades, and analyze their clients’ portfolios 24 hours a day to perform risk analysis.

Aladdin is so widespread today that it’s essentially the central nervous system for many of the largest players in the investment management industry. And for them to be able to offer the service, they have to be granted access to sensitive data from banks, insurance companies, pension funds, and other important institutions all over the world.

Aladdin goes over every possible scenario and pinpoints anything that could possibly go wrong, allowing their clients to make the best investment decisions. Through Aladdin, BlackRock actually oversees more than $21 TRILLION worth of assets.

Their Agenda Will Be Our Agenda

One day, Larry wrote, “Contribute to society, or risk losing our support” in regards to companies and their push to reduce climate change. This is the main reason why companies have been trying to push for sustainability. BlackRock has a major influence on the agenda and future of the world. This poses the question: What other agendas do they have?

If you are interested in trading stocks like BlackRock, consider setting up an account with your parents through investing sites like Webull, Robin Hood, and Ameritrade. There are many companies that employ people with a bachelor’s degree in finance, mathematics, economics, business or a related field, and they pay well! : )

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About the Contributor
Shadd Jimenez, Staff Writer
Shadd Jimenez is a high school senior, a staff writer for the Community News team, and he is a saxophone player in the Golden Valley High School Advanced Jazz Band. He has made numerous honor groups like the Colburn Jazz Combo, the William S. Hart District Jazz All-Stars big band, Hart District Honor Band, Marching Band, Symphonic Band, and many other bands. He was section leader in multiple bands, and is passionate about covering music and the arts. He is passionate about it because he is heavily involved in these topics, and is glad to be a part of the newspaper to research and talk about it. He is also glad to provide information about topics that most people do not know about, but that he finds very interesting. He wants to go to either UCLA or USC for jazz, but is also considering California Institute of the Arts, Manhattan School of Music, and New England Conservatory of Music.