Blackrock's Ties to Washington Increase As 2 Alumni Will Hold Key Positions
On Tuesday, Adewale “Wally” Adeyemo, a former senior international economic adviser to Obama and former chief of staff to BlackRock CEO, Laurence Fink (on the shortlist to be Treasury secretary on Hillary Clinton’s cabinet), was named No. 2 at the Treasury Department. Mr. Adeyemo will serve as Janet Yellen’s right hand man at the Treasury Department.
It's expected that at some point this week Biden will name BlackRock’s head of sustainable investing, Brian Deese (he was key member of the White House Task Force overseeing the bailout of General Motors Corp. and Chrysler LLC in 2009 and advised the government in negotiating the 2015 Paris climate accord), to run the National Economic Council. Mr. Deese focused on integrating environmental and social considerations into how BlackRock invests, a role that lead CEO Fink to announced Blackrock will “place sustainability at the center of our investment approach.” (Both Messrs. Deese and Adeyemo worked in the Obama administration prior to their time at Blackrock).
“By picking folks with deep ties to large asset managers, the administration can help assuage financial executives’ concerns. It sends a clear signal to the industry to breathe easier: They can plan for stability without likely facing massive new regulatory or tax risks,” said Tyler Gellasch, executive director of investor trade group Healthy Markets Association.
The current administration has several former Goldman Sachs executive including Steven Mnuchin as Treasury secretary, former Goldman President Gary Cohn as an economic adviser and other firm alumni to senior roles. Goldman veteran Robert Rubin served as President Bill Clinton’s Treasury secretary, while Henry Paulson Jr. occupied the position in President George W. Bush’s second term. The Obama administration had few Wall Street executives.
BlackRock is the largest asset manager in the world with $7.8 trillion under management as of September. BlackRock is different from Goldman Sachs ( GS's business is arranging mergers and acquisitions and profits from trading) in that its business is investing money for individuals and institutions like endowments, and much of its growth comes from funds that track market indexes.
BlackRock has drawn scrutiny for its role in advising the Federal Reserve on purchases of exchange-traded funds and bonds to support credit markets as part of the central bank’s emergency measures to calm markets. The firm has said it would seek to avoid potential conflicts of interest between its fund investing and the bond buying it is doing for the Fed.
BlackRock’s global footprint and experience with markets “will be invaluable as the president-elect navigates a slowing economy and turbulent markets in the wake of the pandemic,” said Stefan Selig, an investment banker who runs BridgePark Advisors LLC and was undersecretary of Commerce during the Obama administration.
The Biden administration economic team will be filled with economists and policy makers who focus on areas such as income inequality and labor markets.
It was thought that Tom Donilon, chairman of BlackRock think tank arm BlackRock Investment Institute, was in the running for the position as Central Intelligence Agency director, but he recently said he wanted to stay in the private sector.
“Any BlackRock executives that move into the Biden administration need to prove that they are willing to take bold, proactive action to stop climate change and protect the communities most impacted by the crisis,” said Moira Birss, climate and finance director at Amazon Watch.
“This crisis is unlike any we’ve seen since the Great Depression, so it’s unsurprising that President-elect Biden is seeking people with experience in both government and markets to lead the recovery,” said Milan Dalal, managing partner at Tiger Hill Partners, a government relations advisory firm.