Catenaa, Wednesday, January 1, 2025 – The Federal Deposit Insurance Corporation (FDIC) and BlackRock Inc. are on a collision course over new regulatory compliance measures for large stakeholders in US banks.
The FDIC has set a January 10 deadline for BlackRock, the world’s largest asset manager, to accept new oversight terms whenever it owns more than 10% of shares in FDIC-supervised banks, sources close to the matter revealed Monday.
The proposed rules aim to tighten governance of major investment players like BlackRock, Vanguard, and State Street, which collectively manage trillions in passive funds.
Critics fear their growing influence could sway vital sectors of the economy, including pushing companies to adopt specific climate policies.
Vanguard recently agreed to expanded FDIC oversight, including a commitment to passivity agreements for a broader range of banks, marking a regulatory milestone. However, BlackRock has resisted similar terms, arguing they duplicate Federal Reserve oversight, inflate compliance costs, and deter bank stock investments.
In a strongly worded October letter, BlackRock stated that the proposal “would harm investors, disrupt capital flows, and undermine the existing regulatory framework.” The firm proposed alternative agreements in December, but the FDIC insists on measures akin to Vanguard’s deal.
The conflict impacts 39 U.S. community and regional banks where BlackRock holds more than 10% ownership. The FDIC, set for leadership changes after President-elect Donald Trump’s inauguration, has extended deadlines multiple times since October but now appears firm.
FDIC officials argue enhanced compliance is crucial to maintaining financial stability, while BlackRock has until mid-January to respond. Neither party has issued official comments.
