There is a company so large it controls assets worth half of the U.S. GDP, but no matter how hard we tried, we couldn’t find its true owners even after scouring the nooks and cranny of the internet. This is not so surprising considering what we found out about it.
That company is BlackRock, and it is doing a very good job at keeping itself out of your face, which explains why you’ve probably never heard about it. However, it’s too big to hide, and here are ten shadowy facts about it and how its existence and activities affect you.
10 It Controls Trillions in Assets
How many trillions do you think BlackRock controls? One trillion? How about two? Wanna go for three or four?
How about 10 trillion? As of January 2022, BlackRock controls $10 trillion in assets, and that figure is getting larger.
To get a better grasp of the situation, BlackRock controls more money than the GDP of every country in the world, except the USA and China. If it were a country, it would be the third richest country on Earth.
Coming at the close heels of BlackRock is Vanguard, with assets totaling $8 trillion. And talking about Vanguard, that name will pop up a few times on this list. It is as shadowy and elusive as BlackRock and, from the looks of things, may even have more to hide.
9 Why You’ve Never Heard of It
If BlackRock was this big, why haven’t you heard about it? At least, large American banks like JPMorgan Chase, Wells Fargo, and Citigroup often make the news even though they control way less money.
The reality is: You don’t hear about BlackRock because BlackRock has massive investments in the major media companies that would’ve informed you of its existence.
Together, BlackRock and Vanguard have considerable shares in Graham Media Group, which owns Slate and Foreign Policy. They also own between 10 and 18% of CNN, CBS, Fox, Disney, Comcast, Gannett, and Sinclair Broadcast Group. These media companies are international conglomerates with several major media outlets under them.
For instance, Comcast owns Sky, NBC, CNBC, and MSNBC, while Disney owns ABC and the popular opinion poll site FiveThirtyEight. In addition, Gannett owns over 250 newspapers, including USA Today, and Sinclair Broadcast Group owns 72% of local channels in the U.S.
These massive investments in media conglomerates not only allow BlackRock and Vanguard to stay out of the news but also allow them to control what gets into the news.
8 It Is the 4th Arm of the U.S. Government
The 2020 emergence of Covid-19 threw the U.S. and global economy into a mild recession. As usual, the U.S. government and Federal Reserve stepped in to introduce monetary policies to bring things back to normal in the United States. But this time, they brought a friend along: BlackRock.
The U.S. government and Federal Reserve asked BlackRock to help stabilize the U.S. financial market. At the same time, the government used BlackRock’s software to access the financial data they needed. Curiously, the Bank of Canada and the European Union also hired BlackRock for similar purposes.
The deal technically made the Bank of Canada, the EU, and the U.S. government clients of BlackRock. It also gave BlackRock access to top-secret financial data it could use for its own benefit, causing critics to call it the fourth arm of the U.S. government. In response, BlackRock said it wouldn’t share the data with itself.
7 It Owns Shares in Competing Businesses
Competition is one of the hallmarks of the USA and capitalism. The existence of alternatives keeps businesses on their toes and forces them to provide better goods and services. But do we really call it competition when the so-called competitors are owned by the same people?
We are talking about BlackRock here. And because BlackRock is rarely doing this alone, we are dragging Vanguard and State Street along as well. State Street Global Advisors (aka SSgA) is another asset manager, but it earned a notable mention because of its suspiciously close ties to BlackRock and Vanguard. (We’ll get to that soon.)
Together, BlackRock and Vanguard own almost one-third of the shares in Coca-Cola and its primary rival, PepsiCo. They are also the top investors in Boeing and Airbus, Expedia and Skyscanner, Bookings.com and AirBnB, and Facebook, Apple, and Microsoft.
But it doesn’t end there. BlackRock, Vanguard, and State Street own shares in competing airlines, oil companies, refineries, steel plants, mining companies, e-commerce sites, credit card companies, insurance companies, tobacco companies, automobile giants, weapon manufacturers, renewable energy companies, and so on.
Considering BlackRock, Vanguard and State Street are often the major investors in any top competitors we can think of, it makes us wonder if those businesses are really competitors.
6 It Owns Every Pharmaceutical Company
American healthcare is a mess. Drug prices are rising, and everyone keeps blaming Big Pharma—that is, the large corporations making our drugs. Maybe we should free Big Pharma of the blame and turn to their investors instead.
Investors like BlackRock have gobbled up the majority shares in almost every pharmaceutical company you can think of. In fact, the big three: BlackRock, Vanguard, and State Street, own shares in the top three pharmaceutical companies in the US: Pfizer, Johnson & Johnson, and Merck.
And every year, BlackRock, Vanguard, and State Street receive billions of dollars from their pharmaceutical investments. Just have a look: In 2000, pharmaceutical companies paid out $30 billion to their shareholders. In 2018, they paid out $146 billion. Where is all that extra payout coming from? Us. And we’re all wondering why drug prices are going up.
While we will soon expose some sneaky secrets about BlackRock, Vanguard, and State Street, for now, we’ll say they can get away with these controversial investment tactics because it’s completely legal—as long as each investor keeps their ownership in each competing business below 10%.
5 It Actually Controls $20 Trillion
Remember we mentioned BlackRock controls $10 trillion in assets. In truth, what it controls could be two times that amount, thanks to Aladdin. No, not the one from the Arabian Nights but a financial analysis software created by BlackRock.
BlackRock rolled out the first version of Aladdin in 1993 to help it compare changes in the stock it was managing. Aladdin evolved over time and is currently the financial management software of choice for several large companies, asset managers, and multinationals, which use it to control $20 trillion worth of assets.
That is 10% of all financial assets in the world, or if you prefer, four times the money in the world. Twenty trillion dollars is higher than China’s GDP and is at par with the GDP of the United States. Curiously, Vanguard and State Street are two major users of BlackRock’s Aladdin.
4 No One Regulates It
U.S. law requires the Treasury to pay close attention to banks with over $50 billion in assets. BlackRock controls assets 200 times over that amount, yet the government barely pays any attention to it. Why?
BlackRock has legally gotten away with little oversight because it is an asset manager and not a bank. However, that doesn’t explain why the government hasn’t expanded the law to include asset managers or even created a separate law for them altogether.
In fact, this issue once popped up during a Senate hearing, leading Senator Elizabeth Warren to ask Treasury Secretary Janet Yellen if BlackRock wouldn’t pose a risk to the U.S. economy if it failed.
Yellen cleverly dodged the question, saying the Financial Stability Oversight Council (FSOC), the organization that regulates banks with over $50 billion in assets, had investigated BlackRock and would continue investigating it. Warren wasn’t impressed with the answer.
3 It Operates Outside the U.S.
BlackRock invests in several other countries too. However, its activities are no less controversial than they are in the U.S.
BlackRock follows the same method everywhere: First, it befriends the government to obtain the upper hand over the competition and, importantly, avoid government oversight. Then it goes on to invest in everything.
For instance, BlackRock helped the Canadian government set up Canada’s Infrastructure Bank to fund public-private infrastructure projects within Canada. However, the bank came under fire because its existence only benefits BlackRock.
We have seen something similar in Mexico, where BlackRock controls the country’s pension funds and bought shares in Mexico’s toll roads, prisons, hospitals, power plants, and pipelines. And that is not counting the many controversial contracts it won in Mexico’s super-profitable oil industry.
The situation is no better in Europe, where BlackRock won a contract to help the European Union create banking laws that promote clean energy.
The contract was clearly a conflict of interest since BlackRock could create favorable laws that’d benefit the businesses it invests in. In response, BlackRock turned to its favorite line, saying it would not pass whatever information it got from creating the law to other parts of its business.
2 It’s the Reason Americans Can’t Buy Homes
Home prices have been rapidly increasing in the U.S. over the past few years, and we have blamed everything for shooting up prices. Everything except asset managers like BlackRock that is.
In 2021, BlackRock was exposed for buying multiple homes and, in many cases, entire neighborhoods, then converting them into rentals. And it wasn’t going after multifamily apartments that are built for rentals. Instead, it focused on single-family homes that are the property of choice for American homebuyers.
The result is that houses have gotten too expensive, causing families to rent the homes they would have bought.
But the bigger problem is that the sudden increase in home prices encourages investors to borrow money to build family homes, which they would be unable to sell because, again, they’re too expensive. The result is always a housing bubble and, consequently, a recession.
1 The Surprising Owner?
Finally, we’ve arrived at the big question: Who owns BlackRock?
Several investors own BlackRock, but let’s focus on the top four: Vanguard, Capital Research & Management Co., BlackRock Fund Advisors, and State Street (SSgA).
Vanguard (yes, the same Vanguard) is the majority shareholder in BlackRock. Coming second is Capital Research & Management co., which is an elusive company itself. Closely following both companies is BlackRock Fund Advisors, which is a privately held company owned by, you guessed it, BlackRock. Both companies even share the same website and CEO (Laurence “Larry” Fink).
Coming in fourth place is State Street, which we have mentioned a few times in this list. Curiously, Vanguard is also State Street’s majority shareholder, with BlackRock having the second-highest number of shares.
Do you smell something fishy at this point? We certainly do, and we think we may expose the fish by revealing the owner of Vanguard. So, who owns Vanguard?
Well, we don’t know because Vanguard is a privately owned company. It doesn’t trade on the stock exchange like BlackRock and State Street and is 100% owned by its investors. Who are these investors? No one knows, and believe it or not, we couldn’t find any names on the internet.
And a very recent development now has Vanguard owning 10.3% of Twitter’s shares, deftly knocking Elon Musk out of the top spot—for now.