BlackRock Requests Extension For Agreement Over Bank Investments
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
BlackRock has asked the Federal Deposit Insurance Corporation (FDIC) to extend the deadline until March 31. This extension would allow more time to agree on how asset managers, like BlackRock, should invest in large banks when they own 10% or more of a bank’s shares.
The FDIC gave BlackRock a deadline of January 10, which was set after another asset manager, Vanguard, signed a stricter deal with the FDIC on December 27. Since 2019, companies like Vanguard have been allowed to self-certify that they wouldn’t try to influence the board members of the banks where they held large stakes.
Under the new agreement Vanguard created with the FDIC, the company must now allow both external and internal audits to ensure it is not interfering in bank decisions.
BlackRock Asks For More Time To Finalize The New Deal
BlackRock is asking for more time because they believe the deal with Vanguard was the result of months of discussions. BlackRock’s head of U.S. regulatory affairs, Ben Tecmire, wrote a letter to the FDIC explaining that a new agreement should not be rushed.
Ben Tecmire said in a letter that BlackRock is not aware of any problems that would require rushing the process. He added that the firm does not want to hurry a new regulatory plan in just two weeks. BlackRock wants to take the time to ensure everything is done carefully.
BlackRock tried to meet with the FDIC in late 2024, but their attempts were unsuccessful, according to people familiar with the situation. In December, BlackRock presented its own version of the passive investing agreement to the FDIC. This version did not include the same compliance rules that Vanguard agreed to, such as audits. The FDIC did not respond to requests for comment on the letter sent by BlackRock.
BlackRock Expresses Concerns About New Rules
In October, BlackRock had written to the FDIC, saying that stricter rules could harm the economy and decrease the appeal of bank stocks. The company argued that stricter rules would add costs and create confusion because multiple bank regulators, like the Federal Reserve, also oversee the banks where BlackRock invests.
BlackRock asked for more time to finalize rules about investing in large banks. The company wants the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve to work together on the rules.
Ben Tecmire, who works in regulatory affairs at BlackRock, said all the banks involved are already supervised by the Federal Reserve. BlackRock hopes that the FDIC and the Federal Reserve can work together to avoid creating confusing or overlapping rules.
The company is concerned that the new rules might prevent money from flowing into the economy. BlackRock said it could create problems for banks and hurt its investments.
