2008 — Who Knew and Who Profited
Larry Fink invented the weapon. Then they hired him to clean up the bodies.
Larry Fink invented the weapon. Then they hired him to clean up the bodies.
In 1983, he created the mortgage bond market — an instrument allowing banks to package millions of home loans and sell them to investors as securities. Twenty years later, those same instruments detonated the global economy.
When the explosion happened — the government called Fink.
What Happened in 2008
Bear Stearns collapsed under the weight of 750,000 derivative contracts — ABS, MBS, CDOs. The Federal Reserve urgently commissioned BlackRock to assess and liquidate the toxic assets. (Fintool)
AIG, Lehman Brothers, Fannie Mae, and Freddie Mac all hired BlackRock within a matter of months. Treasury Secretary Hank Paulson placed BlackRock on his short list to manage a portion of the $700 billion TARP bailout program. (The Debrief)
BlackRock also advised the Fed on a $300 billion pool of Citigroup assets. The federal government turned to BlackRock to evaluate the toxic assets of Fannie Mae and Freddie Mac. BlackRock served as one of the investment managers in the Fed's mortgage-backed securities purchase program throughout the 2007–2010 crisis. (Recharged)
One man. The same instruments. First he built the problem. Then he received the contract to solve it.
The Question Nobody Asks
The reason was straightforward: no other firm was trusted to pick through the exotic securities infecting banks' balance sheets. At a moment when rating agencies like Moody's and S&P had lost all credibility, BlackRock's valuations had become a de facto seal of approval that buyers and sellers of distressed assets trusted. (The Debrief)
But one question is never asked aloud: why BlackRock specifically?
The company was not the largest. Not the oldest. Yet it — and only it — gained simultaneous access to the balance sheets of Bear Stearns, AIG, Fannie Mae, Freddie Mac, and Citigroup at the same time.
That means one thing: at the height of the crisis, a single private company had a complete view of the entire U.S. financial system. Everything. Simultaneously.
What Came Before the Crisis
Larry Fink's career has been intertwined with the most consequential developments in modern finance. His early work at First Boston helped establish the mortgage-backed securities market that would ultimately destabilize global financial markets. (Biznes-katalog)
This is not coincidence. This is architecture.
A man creates an instrument. The instrument scales to the size of a global catastrophe. The man is invited to manage the catastrophe — without competition, without tender.
The contracts were awarded to BlackRock without competitive bidding. (euronews)
What 2008 Meant for BlackRock
While others were losing, BlackRock was growing. Its reputation solidified. Its access to government opened permanently. And it had acquired data on the entire U.S. financial system.
In 2009, BlackRock acquired Barclays Global Investors — the world's largest index fund manager — for $13.5 billion. It doubled the size of the company in a single transaction.
The crisis did not slow BlackRock. The crisis created the BlackRock we know today.
The question is not whether Fink knew what was coming. The question is whether he was more prepared than anyone else.
The answer is obvious.
Note: Synthesis of widely cited sources.