BlackRock, like Black and Rock
BlackRock’s basically a shadow bank controlling $21 trillion in assets. They’re in the top 5 shareholders of every major S&P 500 company. They manage money for the FRS, central banks, and treasuries. BlackRock’s pulling the strings of the whole global financial system.
Just to be clear, it’s all handled by one company. Not a government, not the Freemasons, not Goldman Sachs, JP Morgan, or Morgan Stanley. Just BlackRock.
If you didn’t fully grasp their reach before—maybe thinking they only control a chunk of the market but don’t have a big global impact—now’s the time to get familiar.
Because they run the whole show and pretty much influence everything.
Larry Fink founded BlackRock in 1988. Funny thing is, if Fink hadn’t screwed up big time and got fired from First Boston, we might not even have BlackRock today. Larry was deep into mortgage bonds alongside Solomon Brothers and Lewie Ranieri, who pretty much owned that market in the 80s.
In 1986, Larry’s department lost $100 million because he messed up his interest rate forecast. That whole experience pushed him to start a company that would not only invest clients' money but also have serious risk management in place.
I mean, every respectable Wall Street player who blows $100 million just has to start their own asset management company, right? Smart move, Larry.
But Larry didn’t pull a Sam Bankman-Fried, and BlackRock didn’t turn into FTX, even though they burned $24 million on a crypto exchange years later.
The reason for BlackRock’s insane growth? That’s one of Wall Street’s best-kept secrets. But it’s getting harder to keep things under wraps when you’re managing something close to the US GDP.
One of the keys to BlackRock’s long-term success? Aladdin.
No, not some street-smart kid from Iraq with a monkey on his shoulder, but a supercomputer like no other in the trading world.
Aladdin runs a huge chunk of the global economy—$21 trillion. BlackRock doesn’t manage all of it directly, but they control about half, and the rest still flows through them since other major funds use Aladdin for their trades. This beast moves money for the US Federal Reserve, hundreds of banks, and thousands of traders, handling 250,000 trades every single day.
The supercomputer sucks in terabytes of data from every market, crunches all possible scenarios, and taps into private and confidential info.
Rick Rieder (CIO of BlackRock) explains how Aladdin helps with their work:
"When I buy an asset, I know exactly how it’s going to affect the rest of the portfolio and how to control the risk tied to that purchase" - says Rieder. When North Korea launched missiles at Japan this fall, he used Aladdin to check if BlackRock’s portfolio was too exposed to the market and realized he needed to buy about $400 million in treasuries to offset the risk.
Any potential loss from Asian geopolitical tensions gets covered by the income from treasury bonds. So when you see headlines like "BlackRock lost $17 billion from investments in Russia", it’s missing the point. If BlackRock lost $17 billion because of the war in Ukraine, that loss was already accounted for when they made the purchase. The company hedges its bets right off the bat.
Aladdin calculates every possible risk. BlackRock doesn’t lose money. They can’t lose on the market.
Every major financial institution, including Goldman Sachs and Vanguard, now relies on Aladdin. 40% of all trades on Wall Street are executed by bots, and Aladdin takes a huge chunk of those trades for itself.
An article in the Financial Times from 2020 highlighted just a portion of Aladdin's reach:
1. Vanguard and State Street Global Advisors (the biggest asset managers after BlackRock, managing over $10 trillion combined);
2. The top 10 largest insurance companies by assets;
3. The world’s largest public pension fund in Japan ($1.5 trillion);
4. And let’s not forget Apple, Microsoft, and Alphabet (Google’s parent company) — the top three biggest public companies in the US.
They all rely on the system to manage hundreds of billions in their corporate investment portfolios. They're all using Aladdin.
Aladdin is like the oxygen for the asset management industry. BlackRock climbed to the top because they control that oxygen and can cut it off whenever they want.
But how do you stay on top for so long and keep a monopoly on the main driver of financial markets when you’re such an easy target for everyone to see ?
Here comes the second secret of BlackRock - its tight friendship with the government.
Officially, BlackRock kinda is the government. The ties between Washington and Larry Fink’s crew are so tangled that it’s hard to tell who’s really working for whom.
You can't hold onto power alone, but if you’re feeding not just yourself but also your pals, they’ll definitely have your back.
BlackRock's scooping up a bunch of former government officials for top spots:
- Thomas Donilon, who used to be Obama's national security advisor;
- Dalia Blass from the SEC;
- Korian Stephenson from the FRS.
As you might guess, these close ties to their old gigs give BlackRock's crew a ton of opportunities and insider info. We're talking about stuff like upcoming legislation or economic data that's not even out yet. Maybe even the scoop on an SEC investigation into some project that won’t hit the papers for a few days.
The government's love affair with BlackRock doesn't stop there. Folks at the firm often go the other way, too:
- Bryn D’s the head of the National Economic Council in the U.S. government;
- Adeyemo (Larry Fink's chief of staff) is the Deputy Secretary of the Treasury.
It’s a two-way street. BlackRock gets the inside scoop, turns it into steady profits, and then shares the spoils with their informants. It’s like an endless money printer that just keeps getting fatter every year.
Since 2004, BlackRock's brought on 64 government officials.
Larry Fink even tried to create a shadow government with ex-BlackRock directors and execs, aiming to snag the Treasury Secretary gig if Hillary Clinton won the 2016 election. But as we know, Trump took it. Still, that didn’t stop Fink from becoming part of the main advisory group for the private sector under Trump. Doesn't matter if they’re Republicans or Democrats—BlackRock’s guys are the ones running the markets.
The connection between the government and BlackRock isn’t just about making bank. Fink and co act like a safety net when everything’s going down the drain.
The government leans on BlackRock's deep access to confidential info during crises:
- Back in 2009, they hit up BlackRock to handle the assets of Bear Stearns and AIG when they were on the brink of collapse.
- Then in 2020, the Fed tapped BlackRock to jump in for emergency asset purchases.
Another secret of BlackRock is their circular ownership structure. They own shares in companies that own shares in BlackRock itself.
In the U.S., there’s the “Big Three” of asset management firms. BlackRock isn’t the only player in the game, though. You’ve got Vanguard, founded by the indexing guru John Bogle. Then there’s State Street, which was started by who-knows-who, but it happened two years after Benjamin Franklin kicked the bucket back in 1792, making it the second-oldest bank in the U.S.
This trio is handling a whopping $15 trillion in assets. And BlackRock holds more than 60% of that, being the top dog in the market.
Now check it out: these guys are flexing together like a tight crew, passing the power around:
- Vanguard owns 9% of BlackRock's shares.
- BlackRock has handed over $2 trillion in liquidity to State Street.
- Most of the funds from Vanguard and State Street are managed by Aladdin.
Instead of fighting each other for that big capital market, the Big Three is out here teaming up to flex on everyone else. They own pieces of each other and together control not just corporate America but companies from other countries too.
Larry Fink didn’t just weave his threads into the U.S. government; he’s also tied himself closely with the only potential rivals in the investment game. Instead of battling regulators, he became one by planting his people in the government. Instead of competing, he wiped out the competition by turning potential enemies into best buds.
Even outside the markets, BlackRock dodges any risk. Here, the company runs things smoothly without Aladdin. With this setup, that money printer keeps rolling without a hitch.
BlackRock's got massive stakes in the equity of all the big firms in the U.S.
You see all those companies? Take a closer look. Scroll through that list from left to right, top to bottom. So many big names, like, way too many.
Well, BlackRock’s in the top five investors in EVERY single one of them. Can you even wrap your head around what holding 7% of Microsoft means? But let’s not just imagine it:
BlackRock's got 520 million shares of Microsoft. That’s $520 million times $255 (per share) = $132.6 billion. Just from one company.
Fink built this massive machine that runs the market. Honestly, BlackRock IS the market. And it looks like nothing's gonna budge that giant from its spot.
BlackRock's got it all figured out for themselves:
- Data? - They’ve got Aladdin.
- Ownership? - It’s a circular thing.
- Regulation? - BlackRock loves the government, and the government loves them back.
That’s how they keep their grip on power. That’s how BlackRock’s running the show now and will keep running it for a long while.