Larry Fink, whose full name is Laurence Douglas Fink, is one of the most recognizable businessmen on Wall Street. Fink is considered a revolutionary for popularizing hundreds of investment products at the firm he founded, BlackRock. These products are recognized around the world as suitable vehicles for a wide range of investors.
Fink was born on November 2, 1952 and today he has become an American billionaire. As Chairman and CEO of the investment firm BlackRock, he has led this organization to the top. BlackRock has assets under the management of more than USD 10 trillion, which gives it great power in the international financial system. As of October 2021, Larry Fink had a net worth of $1.1 billion according to Forbes Magazine.
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Early years
Fink was born on November 2, 1952, and grew up in a Jewish family in the town of Van Nuys, California. Her mother was an English teacher and her father owned a shoe store. Fink graduated as a political scientist from the University of California in 1974. He is also a member of Kappa Beta Phi, a Jewish fraternity with a large following of the most renowned Wall Street executives. Fink also has a master’s degree from the University of California Anderson School of Management.
A career in the financial world
Fink is recognized and praised for having carved a niche for himself within the finance industry. He began his career in 1976 at First Boston, a New York-based investment bank. His expertise and ability in the field of work led him to take charge of the bond department at First Boston. There Fink was a key figure in the creation of mortgage-based assets for the US market. Also within First Boston, Fink was a member of the management committee and co-director of the fixed income tax division. At First Boston, he started an options and futures department and ran the entity’s Real Estate and Mortgage product group.
Fink’s work was very important in adding no less than 1 billion dollars to the assets of First Boston. There he was successful until 1985, when his department lost $100 million due to his incorrect prediction on monetary policy. This experience led him to start a company that would have a new risk management to avoid this type of event.
Birth and success of BlackRock
In 1988, under the corporate umbrella of The BlackStone Group, Fink co-founded BlackRock, fulfilling his dream of owning an independent investment company. From the beginning, Fink was the CEO of the firm, a position he has held to the present day.
When BlackRock split from Blackstone in 1994, Fink retained his position. BlackRock became a more independent company in 1998 under Fink’s management.
To date, BlackRock is the world’s largest investor in fossil fuels. This makes Fink and his company big players in climate change financing. This has been called the “Big BlackRock problem” and has led to the birth of environmental campaigns against the firm. Environmental and activist groups such as the Sierra Club have opposed BlackRock’s investment activities.
BlackRock is also one of the biggest investors in weapons. The firm even has an ETF dedicated to weapons, the “iShares US Aerospace and Defense” that trades under the ticker ITA. In this arms fund, investors can support companies like Northrop Grumman, Lockheed Martin, and Raytheon.
Since 2000
In 2003, Larry Fink helped broker the resignation of New York Stock Exchange CEO Richard Grasso. Grasso was criticized for receiving a $190 million payout in the midst of the 2001 financial crisis and dot-com bubble.
By 2006, Fink led the merger with Merrill Lynch Investment Managers, who doubled BlackRock in the number of assets under management. That same year, BlackRock bought the Villa Stuyvesant Town-Peter Cooper, a complex in Manhattan for USD 5.4 billion. That deal became the largest real estate deal in United States history. However, when the residential project ended in default, BlackRock’s clients lost their money. Among the clients who lost money was the California Retirement and Pension System, which lost nearly USD 500 million.
Golden season
After the financial crisis of 2008 came a golden age and rise for BlackRock. The US government hired the company to help clean up the financial system after the crisis.
Although BlackRock was the best option for the task, Fink’s closeness to the government has given rise to the thesis of conflicts of interest. Many government contracts were awarded to the firm without a competitive process.
Government contracts allowed Larry Fink to cultivate relationships with US Treasury Secretary Tim Geithner. Fink also forged relationships with additional members of the Obama administration’s economic recovery team.
Revolving doors in Washington
By 2016, Fink hoped to also become a member of the federal government led by Hillary Clinton as Secretary of the Treasury. In that same year, BlackRock hired many executives nominated by the Obama administration, including Cheryl Mills, Christopher Meade, Katheryn Rosen, and Ken Wilson. This move strengthened revolving door relationships with the federal government.
In December 2009, BlackRock bought Barclays Global Investors, at which time the company became the world’s largest fund manager.
Larry Fink, a little-known but highly influential man
Despite his great influence, Fink is not well known in the media or in popular culture. There are few interventions of him in the CNBC business news network and mentions in the specialized press such as the Financial Times and Bloomberg. The success of the firm, BlackRock, has been so notorious that it has made Larry Fink extremely wealthy. In 2010, the firm paid him $23.6 million, an amount that has been growing in payments each year ever since. By 2016, BlackRock already had $5 trillion in assets under management.
The successes and recognitions, however, have not stopped and each year more is added, one after another.
Rise as one of the richest men in the world
In 2016, Larry Fink received the ABANA New York Achievement Award, which recognizes outstanding leaders in banking and finance. This award also honors entrepreneurs who have been committed to cooperation between the United States and the Middle East and North Africa.
As of 2018, Fink was ranked by Forbes as the 28th most powerful person in the world.
During the Great Recession, the government again hired BlackRock to help with the 2020 asset purchase program. The program was intended to keep the economy afloat during the Covid-19 pandemic.
Larry Fink’s commitment to community and society
Fink has served on the board of trustees of New York University, where he has held several chairmanships, including chairmanship of the Financial Affairs Committee. He has also been president of the New York University Langone Medical Center. He has also been on the board of the Robin Hood Foundation. He founded the Lori and Laurence Fink Center for Finance and Investment at the University of California in 2009, and is currently the center’s president.
In December 2016, Larry Fink participated in a business forum organized by then President-elect Donald Trump to provide economic advice to the future president.
Over the last few years, Larry Fink’s perspectives on climate change have been evolving. He has gone from laziness and active investment in polluting sectors to increasingly serious concern and commitment.
Larry Fink and the role of CEOs in the modern world
In his letter to CEOs in 2008, he called on corporations to play a more active role in improving the environment. Fink wants companies to work to improve the lives of their communities and to increase diversity in their workforce. This is seen as evidence of a move by BlackRock to achieve each of the governance and sustainability goals.
In his 2019 open letter, Fink said companies and their CEOs must take steps to fill the leadership void and address social and political issues at times when governments fail to address today’s most pressing issues.
After the murder of Arab journalist Jamal Khashoggi, Fink canceled plans to travel in October 2018 to an investment conference in the kingdom of Saudi Arabia. It has long been speculated that the journalist, a critic of the royal house, was killed on the orders of Crown Prince Mohammed bin Salman.
Commitment to environmental sustainability
In his open letter to CEOs in 2020, Fink announced that environmental sustainability was one of the core elements of BlackRock’s future investments, bringing a much more palpable change of direction to the investment policies that have characterized the firm over the years. last years. In his letter, he explained how climate change will become the most important driver of the economy, affecting all aspects of social, political and economic life. Larry Fink also indicated, in a separate letter (addressed to investors), that BlackRock would cut ties with previous investments, which involved thermal coal and other types of investments that are considered to be of great risk to the environment.
Other political and social commitments of Larry Fink
On the other hand, Larry Fink’s social commitment has also gone beyond sustainable investments or supporting educational institutions such as New York University. He has been a recurring donor and supporter of the NYPD Foundation, a group that provides financial support to the NYPD. However, this support has not been without criticism, the non-profit organization Color of Change has urged Fink to end his support for the New York Police Foundation after the murder of George Floyd, an African-American citizen who was killed by suffocation by a policeman. Following Floyd’s death, the United States saw a wave of protests against police violence unprecedented in recent history.
Larry Fink and BlackRock’s investments in China
In his letter to CEOs for 2021, Larry Fink stated that China is “a significant opportunity to meet the long-term goals of its international investors”.
Likewise, during 2021, Fink and BlackRock have been increasing their positions in China. This country is considered a market on the rise and many believe that it will overtake the US economy by 2030.
Likewise, a spokesman for the firm stated: “The overwhelming majority of BlackRock’s assets are for the retirement of workers. BlackRock’s clients, including many US clients, seek a broad set of investments, including those from China, to achieve their retirement and other financial goals. We believe that globally integrated financial markets provide people, companies and governments in all countries with the best and most efficient access to capital that supports economic growth around the world.”
Criticism of BlackRock’s strategy in China
However, not everyone seems to agree with Larry Fink and BlackRock’s enthusiasm for investments in mainland China. In an editorial letter published in the New York Times, George Soros indicated that the firm underestimated the authoritarianism of Chinese President Xi Jinping. Soros explained that investing in China would be “a tragic mistake that could harm the national security interests of the United States and other democracies.”
Soros, who considers himself a defender of the open society, and who even has a foundation that promotes democratic values around the world, the Open Society, sees China’s economic rise with great concern and believes that it comes hand in hand with a boost to authoritarian governments around the world.
Likewise, Soros insists that previously, efforts to build bridges between the United States and China through investments may have been justified. Today China and the United States find themselves in a life-or-death conflict, as both nations represent two completely different models of governance. China represents a repressive and authoritarian model and the United States represents a democratic and open model.
Fink’s defense against George Soros
Larry Fink responded to Soros’ letter in the New York Times by stating that he believes that investing in China is vital for any investor today and cannot be ignored in today’s world when it comes to meeting financial goals and reaching a better society. much more integrated, globalized and dynamic.
The 10 trillion dollar man
In October 2021, Larry Fink was the subject of a wide-ranging Financial Times report entitled: “The 10 Trillion Dollar Man”. In this review, the Financial Times noted BlackRock’s incredible rise as the world’s largest money manager. The newspaper and wondered if a single company should have so much power. In the same way, it has been pointed out how multiple government officials work at BlackRock today and executives who previously worked at BlackRock have left in 2021 to work in the Joe Biden administration.
For some critics, as the Financial Times reported, BlackRock is the new Goldman Sachs, the investment bank that once became so influential it was even dubbed “Government Sachs.” BlackRock is considered to be the life work of one man, Larry Fink.
Larry Fink’s Perspectives on New Financial Technologies
Also in October 2021, Larry Fink noted that bitcoin would have an increasing role in the financial future as a digitized currency and in terms of utility to its users. However, he also indicated that he was not sure if this would be good or not at the level of listing and the prices of the cryptocurrency. In this sense, he also pointed out that he is not very knowledgeable about the cryptographic ecosystem and that therefore he does not know if the cryptocurrency will rise in price or if it will succumb to market speculation, but that he understands very well the interest it arouses among investors and that he knows that its use, regardless of its price, will have a positive impact on society. Fink’s remarks were aired on a CNBC show.
In December 2020, Larry Fink told CNBC that bitcoin could evolve into a global asset.
Environmental commitment to developing countries
Larry Fink declared in an editorial in the New York Times in October 2021 that developing countries would need about 1 trillion dollars a year to face the climate emergency and develop effective strategies to achieve the decarbonization of their economies.
Of these trillion dollars, Fink said that some 100,000 million should be provided by the governments of advanced economies (the OECDE and China). The remaining $900 billion would have to be provided by institutional investors, such as BlackRock, Vanguard and other big investment firms. In this sense, each dollar of government investment in developing countries would attract 9 dollars from private institutional investors.
Fink’s logic about investing in developing countries is that they represent great growth opportunities for investors. However, many investors are hesitant to take their money there due to political risks. Government investment would reduce risks for private investors.
Criticism of Fink’s development proposals
Forbes magazine, citing Fink’s remarks in the Times, called the proposal impractical. Forbes magazine indicates that putting government money into development programs has always been seen as a difficult task. For example, of the $100 billion Paris pledge on climate change, rich nations have only given 10 percent.
Likewise, many issues stand out on the issue of the effectiveness of foreign aid for developing countries. This is because developing countries do not have the governance structures that allow them to efficiently dispose of the aid received. In this sense, Forbes recalls the criticism that Jeffrey Sachs’s book The End of Poverty received in 2005 when he proposed giving 100,000 million dollars annually to developing countries to end poverty.
Still, Forbes agrees with Fink that rich countries have contributed the most to the climate crisis. Therefore, they must bear the greatest responsibility in the decarbonization process. It is also important to note that poor countries need resources to do so. However, this will require more than just a financial push.
Personal life of Larry Fink
Fink has been married to his wife, Lori, since the mid-1970s. The couple owns houses in Manhattan; North Salem, New York, and in Vail, Colorado. They also have three children. Joshua, his eldest son, was CEO of Enso Capital, an entity that once existed as a hedge fund, in which Fink had a stake. In political terms, Fink has been a Democrat all his life.
What is the public perception of Larry Fink?
The perception of Larry Fink in public opinion has been generally mixed.
He is admired by many investors and the media as he managed to build the world’s largest asset management firm from modest beginnings. However, many ordinary citizens view it negatively. BlackRock’s investments in weapons, investments in monopolies such as the big technology companies as well as in polluting companies are things that many reproach him for.
In his 2018 annual letter to CEOs, Fink stated that large companies should be aware of their impact on society. This letter showed an unprecedented concern for the governance and sustainability objectives of companies. However, peace organizations have expressed their discontent with Fink’s “incongruous statements”. BlackRock is the world’s largest investor in weapons manufacturing with its US Defense and Aerospace Force ETF. In September 2018, an activist from the NGO Code Pink confronted Fink onstage at the Yahoo Finance All Markets Conference.
Honors and recognitions
The financial and academic world has widely recognized Larry Fink’s achievements as an executive and financier, as well as his philanthropic work. Some of the recognitions that he has obtained are the following:
In 2007, Fink received the Golden Plate Award from the American Academy of Achievement.
In 2015, the Appeal of Conscience Award and the University of California Medal,
and in 2019 the Charles Schwab Award for Financial Innovation.