BlackRock's Fink Sounds Conflicted on Volcker
The Volcker Rule, named after former Federal Reserve Chairman Paul Volcker, intends to place strict limits on risky trading and investing by banks. The rule is still being finalized, and while proponents, including Senators Carl Levin (D., Mich.) and Jeff Merkley (D., Ore.) argue the rule has too many loopholes, big banks including JPMorgan Chase(JPM) , and Goldman Sachs (JPM) say it is far too restrictive.
|Larry Fink the public citizen finds himself at odds with Larry Fink the BlackRock CEO.|
Asked about the possibility of a "more Draconian" Volcker Rule during BlackRock's first quarter earnings call on Wednesday, Fink said, "I hope it's not. That's not in our interest as investors. It may be in the interest of society. But there is a fundamental cost with that and investors are going to have to pay for that."
That view--that the Volcker Rule "may be in the interest of society"--did not find its way into BlackRock's BlackRock's Feb. 13 comment letter on the rule to U.S. financial regulators.
The letter, signed by government relations chief Barbara Novick and general counsel Matthew Mallow but not by Fink, warns that "to the extent the Volcker Rule constrains asset management and trading activities of U.S. banks and their affiliates without any commensurate benefit to taxpayers and to the economy, it will limit U.S. banks' competitiveness and ultimately weaken the very system it was designed to protect."
Fink's personal view, then, may be slightly at odds with the official position of BlackRock. Or maybe Fink the public citizen finds himself at odds with Fink the financial services CEO. Regardless, it is not the first time Fink has broken with financial services industry orthodoxy.