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(Bloomberg) -- BlackRock Inc. is resisting the Federal Deposit Insurance Corp.’s demands that the world’s largest asset manager submit to new oversight of its stakes in US banks, seeking to delay negotiations into the Trump administration.
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The FDIC had set a Jan. 10 deadline for BlackRock to sign an agreement. But in a letter to the agency, the company asked for an extension until at least March 31, saying it had only two weeks to review a proposed pact that risks hurting its ability to serve clients.
“We are not aware of any imminent or ongoing issues that would warrant hastening the finalization of a completely new regulatory framework in a two-week period,” Ben Tecmire, head of US regulatory affairs at BlackRock, said in the letter obtained by Bloomberg News.
The FDIC didn’t immediately provide comment on the letter.
BlackRock has opposed FDIC efforts over the past year that seek to keep large asset managers from potentially swaying banks in which they have sizable stakes. It has argued that the plan would upend index funds that dominate many investor portfolios, make it more costly for banks to raise capital and disrupt the economy.
Fed Agreement
The company said it already has a similar “passivity agreement” in place with the Federal Reserve.
FDIC board members Jonathan McKernan, a Republican, and Rohit Chopra, a Democrat and director of the Consumer Financial Protection Bureau, have pushed repeatedly for more oversight of the index fund giants, arguing that their size and concentrated ownership could give firms undue influence over the management and strategy of US banks.
BlackRock’s agreement with the FDIC was expected to be similar to Vanguard’s pact announced in late December.
In 2019, Vanguard committed to a “passivity agreement” when its funds held more than 10% of the outstanding shares of certain banks. But the latest agreement is more expansive, requiring external and internal audits to verify that Vanguard is not seeking to influence the management or control the board of directors of a lender. It also would cover a broader group of banks.
Industry trade groups and BlackRock have said that existing oversight, including by the Fed, already provides assurance that index funds are acting passively rather than exercising control of banks. BlackRock has said the FDIC should coordinate any new scrutiny with the Fed, which already has a passivity agreement in place with the firm.