Click here for Full Issue of EIR Volume 48, Number 7, February 12, 2021

BlackRock’s March to World Power

by Karel Vereycken

Jan. 29—Since the 1999 official abrogation of Presi- another, became the rulers of the world.
dent Franklin Roosevelt’s Banking Act of 1933—the However, after the famous “Lehman moment” of
Glass-Steagall Act that imposed a strict separation be- 2008, some elementary prudential rules were enacted to
tween commercial and deposit banks on the one hand, try to prevent excessive speculation and systemic risk.
in charge of keeping our savings and money safe by Wall Street lawyers and greedy money sharks, of
avoiding risk; and investment banks on the other, paid course, invented smart ways to sail around these ob-
to take risks on the highly volatile markets—since stacles. Armed with super-powerful computers using
then it has been the latter who have triumphed. Giant sophisticated algorithms, three giant “asset managers,”
banks such as JPMorgan Chase and Goldman Sachs, financial shadow corporations known as “The Big
who supplied and hired one top public official after Three” (BlackRock, Vanguard and State Street),

CC/Quantumquark CC/Americasroof CC/C R

An evil “taxonomy”: From the towers of Goldman Sachs (left), JPMorgan Chase (right), and first and foremost BlackRock, Inc.
(center), companies around the world are being told to stop investing in fossil fuels and their technologies, and to make investments
in a new “green finance” bubble instead.

30  The Great Leap Backward: LaRouche Exposes the Green New Deal EIR 
February 12, 2021

© 2021 EIR News Service Inc. All Rights Reserved. Reproduction in whole or in part without permission strictly prohibited.
became the kings of the day. Here agement, as of January 31,
is how it happened. 2020.
And lastly, the Boston-based
As in Silicon Valley, firm State Street Global Advisors
Algorithms Decide (SSGA) is another asset manage-
Since 2008, new technologies ment company, with $3.1 trillion
have transformed the world of fi- under management. SSGA is a di-
nance. First, the spectacular im- vision of State Street, with $36.64
provement of computer technolo- trillion in custody, the world’s
gies, notably the development of second-largest “custodian bank,”
High Frequency Trading (HFT), a specialized financial institution
has brought many private as well responsible for safeguarding a
as institutional investors to shift firm’s or individual’s financial
capital from “actively” managed assets and not engaged in “tradi-
mutual funds to “passively” tional” commercial or consumer/
(computer) managed index DoC retail banking.
mutual funds and “exchange Peter G. Peterson, a former Secretary of Of course, compared to the
Commerce, founded the Blackstone Group in
traded funds” (ETFs). 1985, which later set up BlackRock. United States’ largest bank, JP
While active management re- Morgan Chase, which has on its
quires traders and fund managers who strive to buy balance sheets $3.1 trillion in assets, BlackRock, with
stocks that will outperform others, “passive” manage- $165 billion of assets on its balance sheets, might
ment—the use of mathematical algorithms—turns out look tiny. But through, not their ownership, but their
to work better and to be safer and cheaper. When the “assets under management,” the Big Three of the “fi-
stock market rises steadily, tracking a stable basket of nancial service” industry place themselves at the very
values with an algorithm pays off more than analysts’ center of global financial power. Today, and taken to-
intuitions. Academic research regularly demonstrates gether, the Big Three manage about $18 trillion,
this. almost $3 trillion more than the GDP of a country that
is close to becoming the world’s leading economic
The Big Three power, China!
Between 2008 and 2015, investors sold holdings of The primary source of these assets under man-
“actively” managed equity mutual funds worth roughly agement are pension funds, mainly those of Califor-
$800 billion, while at the same time buying “passively” nia and New York state government employees. All
managed funds to the tune of approximately $1 tril- have funded pensions and are hoping to see their own
lion—an historically unprecedented swing in invest- savings, already supplemented by their employer,
ment behavior. blossom in the financial markets, under manage-
Crucially, this large and growing industry of “pas- ment.
sive management” is dominated by the “Big Three”—
BlackRock, Vanguard, and State Street. From Blackstone to BlackRock
Founded in 1988, initially as an asset and risk BlackRock is an offshoot of The Blackstone Group
management firm with some emphasis on fixed-in- (TBG), an “alternative investment” management com-
come institutional asset management, the New York- pany founded in 1985 by Peter G. Peterson, a former
based firm BlackRock, Inc. is the world’s largest asset CEO of Lehman Brothers, and Stephen A. Schwarz-
manager, with $8.67 trillion in assets under manage- man. Peterson, a former Commerce Secretary, has
ment as of January 2021. For BlackRock, index always been at the forefront of the campaign to cut or
“products” represent more than $5 trillion of that privatize Social Security.
total. Two years after TBG’s founding, in 1987, in ex-
Just behind BlackRock, one finds the Vanguard change for a 50% stake in the bond business, TBG
Group, another U.S.-registered investment advisor gave a $5 million credit line to Larry Fink and Ralph
with about $6.2 trillion in global assets under man- Schlosstein, who had previously run the mortgage-

February 12, 2021  EIR The Great Leap Backward: LaRouche Exposes the Green New Deal  31
backed securities divisions at First
Boston and Lehman Brothers, to
create a new firm. Peterson believed
in Fink’s vision of a firm devoted to
risk management. The firm that Pe-
terson helped create, before adopt-
ing the name BlackRock in 1992,
was called Blackstone Financial
Management. Within months, its
business turned profitable. At First
Boston, Fink and his team had been
pioneers in the mortgage-backed se-
curities (MBS) market, a kind of
high-risk financial derivatives com-
pletely decoupled from the real
economy, being assets that Warren CC BY-SA/Gerhard Roux

Buffett at one time rightly branded South Africa relies on coal for 80% of its power. Shown: the coal-fired Arnot Power
as “financial weapons of mass de- Station in Mpumalanga, South Africa. Under Pressure from BlackRock, the Korea
Electric Power Corporation has cancelled a $1 billion contract to build part of the
struction.” planned 1,200 MW Thabametsi coal-fired plant.
Moving into passive investing put
BlackRock’s growth “on steroids,” says Greggory Barclays Global Investors in a deal that included
Warren, an analyst at Morningstar Inc. BlackRock has Barclays’ iShares ETF business; and three years
become the world’s largest global issuer of exchange- before that, the firm acquired Merrill Lynch Invest-
traded funds (ETFs) today; a pioneer in junk bonds; and ment Management. With the profits earned by sell-
even if it is not a bank, it has often been referred to as ing financial advice to pension funds and institutional
the world’s largest “shadow bank.” investors, BlackRock bought shares of 17,000 com-
Today, BlackRock employs 13,900 people spread panies and firms, not only in the United States but
over 30 countries, tasked with selling financial prod- worldwide, and they never fail to vote at each general
ucts or investing in new companies. In 2009, Black- meeting. French economic journalist, Grégoire
Rock, joining with the City of London, acquired Favet:

As soon as BlackRock appears as

one of your shareholders, your
company stands out from the
crowd and gains a huge amount of
prestige. When you are Larry
Fink, you can talk as equals with
the director of the IMF or a head
of state. Mr. Fink has already
been received twice at the Élysée
since the election of Emmanuel
Macron.

Hence, the Big Three together

KEPCO constitute the largest shareholder of
The 311 MW Cebu Power Plant in Naga City, Philippines, uses the modern Circulating all U.S. corporations and are the
Fluidized Bed Combustion method, showing a commitment by the Philippines to clean
coal technology. BlackRock has forced the government to declare a moratorium on all
largest shareholder in each of 88%
new greenfield coal-fired plants, including a 1,200 MW plant under contract to be of the S&P 500 firms.
built by KEPCO. In France alone, these funds are a

32  The Great Leap Backward: LaRouche Exposes the Green New Deal EIR 
February 12, 2021
5-10% shareholder, via a string of subsidiaries,
of Eiffage, Danone, Vinci, and Lagardeère, but
also of Renault, Peugeot, Société Générale,
Axa, Vivendi, Total, Sanofi, Legrand, Schnei-
der Electric, Veolia, Publicis, etc. BlackRock is
a shareholder, often the principal one, in at least
172 of the 525 French companies listed on the
French stock exchange, the CAC.

The Magic Lamp of Aladdin

To understand the reason for the spectacular
rise of BlackRock, one has to be aware that the
key to “passive” index trading, derives directly
from powerful computer technology for assess-
ing risks in real time. Risk management became
the foundation and the cornerstone of the firm’s
entire platform. To get there, in 2000 Black-
Rock launched BlackRock Solutions (BRS), the
firm’s own risk management division, which
developed an electronic system called Aladdin Pexels/Lukas

(Asset, Liability, Debt and Derivative Invest- Armed with its Aladdin portfolio management software tool, BlackRock
has leveraged increasing control over corporate and government
ment Network). This electronic application—a financial decisions. Shown: A market monitor showing fluctuations in
cluster of 6,000 high-performance computer values.
servers constantly monitoring nearly $18 tril-
lion, or 8% of the world’s financial assets—keeps surer American International Group (AIG), Freddie
track, in real time, of some 30,000 investment portfo- Mac, Morgan Stanley, Citigroup, and other financial
lios, including BlackRock’s own along with those of firms that were going belly-up following October
competitors, banks, pension funds, and insurers. 2008.
Thanks to this highly sophisticated computer system Only BlackRock’s program Aladdin was “able to
managed by a 2,000-person army of mathematicians analyze the risks of investing in any stock, to highlight
and IT specialists, BlackRock, in a joint venture with where to sell bonds to attract the best price, to track all
Google, has shifted part of its investments from human transactions, to bring together all the data and have at
analysts to the algorithms of its artificial intelligence hand information vital to investors,” explained the Fi-
platform. nancial Times.
Equipped with this very powerful analytical tool, Taking advantage of the panic, and of course for a
and having access, as a major shareholder, to the bal- good price, BlackRock put Aladdin at the disposal of
ance sheets of a huge part of the Western economies, other financiers, institutions, and increasingly, govern-
BlackRock has been increasingly called on to advise ments. Hence, BlackRock picked up a contract to mon-
governments in crisis situations. itor Fannie Mae and Freddie Mac, the public mortgage
In May 2009, when the financial crises still credit institutions that the federal government had just
looked unmanageable, BlackRock, together with rescued.
top Wall Street lawyers from Sullivan & Cromwell For example, both Vanguard and State Street Global
and some others who legally engineered most of Advisors, the two other firms of the Big Three, are users
Wall Street’s high-risk mergers and acquisitions, of Aladdin, as are half the top 10 insurers by assets, as
were retained by the U.S. Treasury Department, not well as Japan’s $1.5 trillion government pension fund,
to liquidate, but to rescue (i.e., to analyze, unwind, the world’s largest. Apple, Microsoft, and Google’s
and price) the toxic mortgage assets that were owned parent firm, Alphabet, the three biggest U.S. public
by investment bank Bear Stearns, the world largest in- companies, all rely on Aladdin to steward hundreds of

February 12, 2021  EIR The Great Leap Backward: LaRouche Exposes the Green New Deal  33
billions of dollars in their corporate treasury in-
vestment portfolios.
Auditing on behalf of the public sector, in-
vesting in the private sector: two self-evidently
incompatible hats. As early as 2009, elected
representatives started wondering. For exam-
ple, Republican Senator Charles Grassley
asked:

How is it that only one company is qualified

to manage these assets recovered by the gov-
ernment? They have access to information
about when the Fed will try to sell securities
and at what price. And they cultivate highly
developed financial relationships with people
around the world. The potential for a conflict
of interest is great and it’s complicated to
regulate.
Gage Skidmore
Senator Charles “Chuck” Grassley (R-IA), speaking in May 2009, when
Even President Donald Trump, on March the financial crisis seemed unmanageable: “How is it that only one
2020, when the COVID-19 pandemic started company [BlackRock] is qualified to manage these assets recovered by
hurting the U.S. economy, called Larry Fink for the government?”
advice.
adviser to states on privatization. In the Autumn of
Lobbying and Politics 2017, it was invited by the French government to sit
In Europe, following the example of the Fed, the on the Comité Action Publique 2022 (CAP 2022), a
ECB called upon BlackRock to conduct stress tests for kind of second Attali Commission, meant to sketch
European banks including those in which it had shares. out the future contours of the French state. Behind
At the beginning of 2018, this contract was extended. the scenes in Europe the firm is very busy countering
Danièle Nouy, Director of the ECB’s Supervisory any attempt to increase regulation of large financial
Board, said that in 2016, the ECB had paid €8.2 million firms.
for the job. In financial terms, for a giant like Black- To consolidate its grip on world power, Black-
Rock, this is very little. “Working for the central banks Rock increasingly invests in politicians. Just as did
of the Netherlands, Spain, Ireland, Cyprus or Greece Goldman Sachs when hiring Peter Sutherland, the
brings something much more exciting than money: in- former boss of the World Trade Organization; Manuel
formation,” notes Wolf Street, the well-informed web- Barroso, the former head of the EU Commission; or
site run by former trader Wolf Richter. Mario Draghi, the former head of the ECB, BlackRock
BlackRock has always said that it carefully man- has set its sights on Europe and spends heavily on re-
ages potential conflicts of interest through a “Chinese cruiting top political figures possessing large address
Wall” that separates its consulting business from its books. Notably this includes the failed successor of
asset management business. A promise that, of course, Chancellor Merkel, Friedrich Merz; the former head
only engages those foolish enough to believe in it. In of the Swiss National Bank, Philip Hildebrand; the
reality, the ECB has no power over this company. former UK Finance Minister George Osborne; or Pas-
BlackRock’s argument is simple: We don’t operate with chalis Bouchoris, the former head of the Greek priva-
leverage; we don’t act like banks, so we don’t need to tization program. Larry Fink can fly to Europe and in
be regulated as a systemic institution. less than five hours get an appointment with most EU
In Europe, we find BlackRock as an auditor of presidents, prime ministers, or CEOs of large business
banks engaged by regulatory authorities and as an corporations.

34  The Great Leap Backward: LaRouche Exposes the Green New Deal EIR 
February 12, 2021
For Biden, Only BlackRock’s Life Matters The Intercept took the occasion to expose “asset
This year’s Davos “Great Reset” agenda meeting management”:
has no doubt accelerated the transition into green fi-
nance. That U.S. President Joe Biden, who has made Asset managers don’t package and sell dodgy
the Green New Deal his policy, picked several high- financial products like investment banks, and
level officials of BlackRock to be part of his adminis- don’t trade with borrowed money like hedge
tration, is no surprise. funds, so they are typically viewed as more re-
As reported in 2016 by The Intercept, Larry Fink, strained and less averse to regulation than their
betting Hillary Clinton would win the elections— colleagues in those related industries. But they
are embedded in the broader financial system
assembled a veritable shadow government full as voracious buyers of securities.… They may
of former Treasury Department officials at his not create the risk, but they own a lot of it.…
Whether buy-side firms like
BlackRock represent a systemic
risk to the financial system is the
subject of some debate. Some
believe asset managers could
trigger problems by failing to
pay off counter-parties, or being
forced into a fire sale of their
assets.
[But Fink and BlackRock]
pushed hard to successfully resist
the designation of asset managers
as systemically important finan-
cial institutions (or SIFIs), which
would be subject to additional
regulation like larger capital re-
quirements.
WEF
Laurence Fink, Chairman and CEO of BlackRock, Inc., the world’s largest asset Directly opposing the fight of the
Lyndon LaRouche movement, “Fink
management firm, with more than $6.5 trillion in assets under management, speaking
at the Davos Agenda 2021 World Economic Forum. also opposes efforts to reinstate the
Glass-Steagall firewall between in-
company. Fink has made clear his desire to vestment and commercial banks, as does [Hillary]
become Treasury Secretary some day. The Clinton,” wrote The Intercept. Reinstatement of the
Obama administration had him on the short list Glass-Steagall Act would pave the way for an eco-
to replace Timothy Geithner. When that didn’t nomic and industrial renaissance in the United States
materialize, he pulled several members of prior and abroad,
Treasury Departments into high-level positions What BlackRock failed to impose under Trump,
at the firm, an attempt to improve the prospects it now hopes to implement under Biden. To start
of realizing his dream in a future Clinton admin- with, Biden appointed lawyer Adewale “Wally” Ad-
istration. eyemo, the former chief of staff to Larry Fink, as
Assistant Secretary of the Treasury, that is, as the
Hillary Clinton, for her part, of course never ruled number two to Janet Yellen, Obama’s former Fed-
out a Treasury Secretary drawn from Wall Street. Fink’s eral Reserve Chairman. From the beginning,
ready-made team was available for a move from Wall Biden’s donors had suggested that he appoint Larry
Street to Washington. Fink as Secretary of the Treasury! As a symbol, it

February 12, 2021  EIR The Great Leap Backward: LaRouche Exposes the Green New Deal  35
was probably a bit too controversial as
a starter.
Adeyemo, who was born in Nigeria
but grew up in California, first worked as
editor of the “Hamilton Project,” an eco-
nomic think-tank under the Brookings
Institution set up by Obama confidant
Peter Orszag of the investment bank
Lazard Frères. Adeyemo is also a
member of the circle of gravediggers of
the Glass-Steagall Act, including Larry
Summers, Timothy Geithner, Robert
Rubin and Eric Schmidt of the Alphabet
group (Google). Adeyemo then became
Jack Lew’s deputy chief of staff at the
Treasury Department. He then operated
C-SPAN
as a chief negotiator for the major ultra- Adewale “Wally” Adeyemo, former chief of staff to BlackRock’s CEO Larry
liberal free trade agreement called the Fink, is now Assistant Secretary of the U.S. Treasury Department.
Trans-Pacific Partnership. Under
Obama, in 2015, he was appointed Deputy National the Paris Climate Agreement and other national
Security Advisor for International Economics and and international initiatives.
Deputy Director of the National Economic Council.
He then became the first president of the Obama Foun- Third, Michael Pyle, an Obama administration vet-
dation. eran who also worked on economic policy in Hillary
Next, Biden named Brian Deese as director of the Clinton’s presidential campaign and whom we men-
National Economic Council. On BlackRock’s website, tioned before, was nominated as chief economist to
Deese’s CV reads as follows: Vice President Kamala Harris.
Joe Biden initially envisioned
Brian Deese, Managing Direc- even nominating Tom Donilon,
tor [of BlackRock], is Global the president of the BlackRock In-
Head of Sustainable Investing vestment Institute (BII) as head of
at BlackRock. The Sustain- the CIA, but that didn’t material-
able Investing team is focused ize. Tom Donilon, besides being
on identifying drivers of long- the brother of Biden’s main media
term return associated with advisor Mike Donilon, is a member
environmental, social and of the Trilateral Commission, the
governance issues, integrating Council on Foreign Relations
them throughout Blackrock’s (CFR) and the Executive Board of
investment processes, and cre- the secretive Bilderberg Society.
ating solutions for our clients As documented in the other ar-
to achieve sustainable invest- ticles of this dossier, BlackRock is
ment return. Previously, Brian working overtime to bring a will-
worked in the White House ing Biden into the British geno-
under President Obama where cidal plan to “green” the world’s
he was the President’s senior White House
finance—not to save the climate,
Brian Deese, formerly Global Head of
advisor for climate and energy Sustainable Investing at BlackRock, is now but to save their doomed and al-
policy, helping to negotiate Director of President Biden’s National ready collapsing empire of debt
Economic Council. “assets” and fictitious capital.

36  The Great Leap Backward: LaRouche Exposes the Green New Deal EIR 
February 12, 2021