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The Federal Deposit Insurance Corp. and BlackRock are due to be held in January as the U.S. regulator seeks to strengthen oversight of investors who hold large stakes in small and medium-sized banks.
of FDIC It has committed to a massive investment of $11.5tn until Jan. 10 to accept new compliance measures planned for each bank it owns more than 10 percent of, according to people familiar with the situation.
Some politicians and regulators have been gaining more and more power BlackrockVanguard and State Street bought every company in the index because of the massive flood of money flowing into “flexible” funds.
These critics worry that large passive fund managers may be pressured to influence companies that are critical to the economy, such as tackling climate change.
Vanguard They reached an agreement last week He promised to testify to the FDIC that he would be a far better investor than the group of banks he had previously been. The new group includes lenders that are part of a large bank holding company. For the first time, Vanguard has agreed to some oversight by the FDIC, which will comply with its “pass-through agreements.”
But Blackrock and investment industry groups They filed a complaint. Strengthening the FDIC’s passivity agreement requirements would increase oversight by the US Federal Reserve, raise compliance costs and make bank stocks less desirable investments.
“BlackRock strongly opposes the proposal, which harms investors, hinders the flow of capital to the economy and undermines the effectiveness of the existing regulatory framework,” the group wrote in an October opinion letter.
In early December, BlackRock submitted its own version of the pass-through agreements to the FDIC that did not include the supplemental measures agreed to by Vanguard. The regulator contacted BlackRock on Friday and set a Jan. 10 deadline for it to sign something similar after making Vanguard’s deal public, people familiar with the situation said.
FDIC Director Jonathan McKernan, who has been publicly pushing for new transit agreements, has repeatedly said strong compliance measures are necessary.
Thirty-nine US community and regional banks will be directly affected by the compliance fight, as BlackRock owns more than 10 percent of each.
The FDIC has repeatedly pushed back the deadline for the Pacific deal after first setting it for Oct. 31. The regulator is expected to have a new chairman and several new board members after Donald Trump takes office on Jan. 20.
BlackRock and the FDIC declined to comment. State Street was not affected by the war because it was a bank and therefore already more tightly regulated.
