Buzz
There exists a colossal company that manages assets amounting to half of the U.S. GDP. Despite extensive research, we were unable to uncover its true owners, even after scouring the far reaches of the internet. This isn’t all that shocking given what we uncovered about it.
This enigmatic entity is BlackRock, and it has mastered the art of staying out of the spotlight, which likely explains why it remains largely unknown to the public. However, its sheer size makes it impossible to remain hidden, so here are ten shadowy facts about it and how its operations impact your life.
10. It Commands Trillions in Assets
Just how many trillions do you think BlackRock controls? One trillion? Two? What about three or four?
What about $10 trillion? As of January 2022, BlackRock manages $10 trillion in assets, and that number continues to rise.
To put it into perspective, BlackRock controls more wealth than the GDP of every nation on Earth, except for the USA and China. If it were a country, it would rank as the third richest on the planet.
Trailing closely behind BlackRock is Vanguard, with $8 trillion in assets. Speaking of Vanguard, the name will come up several times throughout this list. It is just as secretive and hard to track down as BlackRock, and judging by the situation, it may have even more to conceal.
9. The Reason You’ve Never Heard of It
If BlackRock is this massive, why hasn’t it made headlines? After all, large American banks like JPMorgan Chase, Wells Fargo, and Citigroup frequently make the news, despite managing far less money.
The truth is, you don’t hear about BlackRock because it has major investments in the leading media companies that would have otherwise informed you about its presence.
Together, BlackRock and Vanguard hold significant stakes in Graham Media Group, which owns Slate and Foreign Policy. They also have shares ranging from 10% to 18% in CNN, CBS, Fox, Disney, Comcast, Gannett, and Sinclair Broadcast Group. These media giants control numerous prominent outlets across the globe.
For example, Comcast owns Sky, NBC, CNBC, and MSNBC, while Disney owns ABC and the widely known polling site FiveThirtyEight. Moreover, Gannett controls over 250 newspapers, including USA Today, and Sinclair Broadcast Group owns 72% of local channels in the U.S.
These immense investments in media conglomerates not only help BlackRock and Vanguard stay out of the public eye, but they also enable them to influence the narrative and control what information gets shared.
8. It Functions as the 4th Branch of the U.S. Government
The onset of Covid-19 in 2020 plunged the U.S. and global economies into a brief recession. As expected, the U.S. government and Federal Reserve intervened with monetary policies to restore stability. However, this time, they enlisted an unexpected partner: BlackRock.
The U.S. government and Federal Reserve enlisted BlackRock to assist in stabilizing the U.S. financial markets. Simultaneously, the government used BlackRock’s software to access vital financial data. Interestingly, the Bank of Canada and the European Union also hired BlackRock for similar tasks.
This arrangement effectively made the Bank of Canada, the EU, and the U.S. government clients of BlackRock, granting the firm access to sensitive financial data for its own use. Critics quickly dubbed BlackRock the fourth arm of the U.S. government. In response, BlackRock stated it would not share the data internally.
7. It Holds Stakes in Competing Companies
Competition is a core principle of the U.S. economy and capitalism. The presence of alternatives forces businesses to stay competitive and offer better products and services. But can we truly call it competition when the so-called rivals are controlled by the same entity?
When we talk about BlackRock, we’re not just talking about one company. BlackRock rarely operates alone, and that’s why we’re also bringing Vanguard and State Street into the picture. State Street Global Advisors (SSgA) is another major asset manager that deserves a mention due to its suspiciously close ties with BlackRock and Vanguard. (We’ll delve into that shortly.)
But the story doesn’t stop there. BlackRock, Vanguard, and State Street hold stakes in a wide range of competing industries: from airlines, oil companies, refineries, and steel plants to mining companies, e-commerce platforms, credit card firms, insurance giants, tobacco manufacturers, auto manufacturers, weapons makers, renewable energy firms, and beyond.
Given that BlackRock, Vanguard, and State Street are frequently the largest investors in almost any major competitors we can think of, it raises the question: Are these businesses truly competing with each other?
6. It Controls the Entire Pharmaceutical Industry
The state of American healthcare is in turmoil. Drug prices keep climbing, and the finger is always pointed at Big Pharma—the large corporations behind the drugs. But maybe it’s time to stop blaming Big Pharma and start looking at their investors instead.
Investors like BlackRock have taken control of the majority shares in nearly every pharmaceutical company imaginable. In fact, the three giants—BlackRock, Vanguard, and State Street—own stakes in the top three U.S. pharmaceutical companies: Pfizer, Johnson & Johnson, and Merck.
Each year, BlackRock, Vanguard, and State Street rake in billions from their pharmaceutical investments. Consider this: In 2000, pharmaceutical companies distributed $30 billion to their shareholders. By 2018, that number had surged to $146 billion. So where is all that extra money coming from? Us. And we’re all asking why drug prices keep rising.
While we’ll soon unveil some of the less-than-transparent actions of BlackRock, Vanguard, and State Street, for now, we’ll note that these controversial investment practices are entirely legal—so long as each investor keeps their stake in any competing business below 10%.
5. It Truly Controls $20 Trillion
You may recall that BlackRock controls $10 trillion in assets, but in reality, its true control could be double that amount, thanks to Aladdin. No, not the one from the Arabian Nights, but a financial analysis tool developed by BlackRock.
In 1993, BlackRock introduced the first version of Aladdin, a tool designed to help compare stock changes under its management. Over time, Aladdin evolved into the preferred financial management software for numerous large companies, asset managers, and multinationals, helping them control $20 trillion in assets.
That’s 10% of all financial assets globally, or, if you prefer, four times the entire world’s money supply. A staggering $20 trillion exceeds China’s GDP and is roughly equivalent to the GDP of the United States. Interestingly, Vanguard and State Street are two of the biggest users of BlackRock’s Aladdin software.
4. It Faces No Regulation
U.S. law mandates that the Treasury closely monitors banks with assets exceeding $50 billion. BlackRock manages assets 200 times that size, yet the government barely seems to take notice. Why is that?
BlackRock has managed to avoid significant oversight because it is classified as an asset manager, not a bank. However, this still doesn’t explain why the government hasn’t broadened the scope of the law to include asset managers or created a specific set of regulations for them.
This issue even surfaced during a Senate hearing, where Senator Elizabeth Warren asked Treasury Secretary Janet Yellen whether BlackRock would present a risk to the U.S. economy if it were to fail.
Yellen skillfully avoided the question, stating that the Financial Stability Oversight Council (FSOC)—the body tasked with regulating banks holding over $50 billion in assets—had already investigated BlackRock and would continue to do so. Warren wasn’t satisfied with this response.
3. Who’s the Surprising Owner?
At last, we reach the million-dollar question: Who owns BlackRock?
Multiple investors hold stakes in BlackRock, but let’s focus on the top four: Vanguard, Capital Research & Management Co., BlackRock Fund Advisors, and State Street (SSgA).
Vanguard (yes, the very same Vanguard) holds the majority of shares in BlackRock. The second-largest shareholder is Capital Research & Management Co., which is a rather elusive company. Just behind them is BlackRock Fund Advisors, a private company that, as you might have guessed, is owned by BlackRock itself. Both companies share the same website and CEO, Laurence 'Larry' Fink.
In fourth place is State Street, which we've mentioned a few times on this list. Interestingly, Vanguard is also the majority shareholder in State Street, with BlackRock holding the second-largest number of shares.
Are you starting to sense something off here? We certainly are, and we think the fishy details will become clearer when we reveal the owner of Vanguard. So, who exactly owns Vanguard?
Well, the truth is, we don’t know. Vanguard is a privately owned company, not publicly traded like BlackRock and State Street. It is 100% owned by its investors. But who are these investors? No one knows, and, believe it or not, we couldn't find any names online.
2. It’s the Reason Americans Can’t Buy Homes
Over the past few years, home prices in the U.S. have been rising at a rapid pace, and we’ve blamed all sorts of factors for this surge. Yet, one important factor is often left out of the conversation: asset managers like BlackRock.
In 2021, BlackRock came under scrutiny for purchasing numerous homes, and in some cases, entire neighborhoods, only to turn them into rental properties. Interestingly, BlackRock wasn't targeting multi-family apartment buildings designed for rental purposes. Instead, it focused on single-family homes, the type of property Americans typically dream of buying.
As a result, home prices have skyrocketed, forcing families to rent the very homes they would have otherwise purchased.
The larger issue is that this sharp rise in home prices prompts investors to borrow money to construct homes meant for families. But they can't sell them because the prices are simply too high. This leads to a housing bubble and, eventually, a recession.
1. It Operates Outside the U.S.
BlackRock also has investments in various countries around the world. However, its operations abroad are just as controversial as its actions in the U.S.
The company uses the same approach everywhere: it first gains favor with the government to secure an advantage over competitors and, crucially, avoid governmental scrutiny. Then, it proceeds to invest in virtually everything.
For example, BlackRock played a significant role in helping the Canadian government establish Canada’s Infrastructure Bank to finance public-private partnerships for infrastructure projects. However, this initiative drew criticism for seeming to primarily benefit BlackRock.
A similar situation occurred in Mexico, where BlackRock controls the country’s pension funds and acquired shares in several major sectors including toll roads, prisons, hospitals, power plants, and pipelines. This doesn’t even account for the highly profitable contracts it secured in Mexico’s oil industry.
BlackRock’s influence in Europe is no different. It secured a contract to help the European Union draft banking regulations designed to promote clean energy.
The contract clearly presented a conflict of interest, as BlackRock could potentially shape laws that would benefit its own investments. In response, BlackRock defended itself with its usual refrain, stating that it would not share any information obtained while drafting the law with other branches of its business.
