Larry Fink: the undisputed king of Wall Street
In 1976, fresh out of an MBA at UCLA Business School, Larry Fink “fled to Wall Street” without having a clear idea of what he wanted to do “other than earn money. ‘money,’ says the Financial Times.
Hired by First Boston as a bond trader, Fink proved to be “a rare talent” and, within a decade, became the youngest managing director in First Boston history. “My team and I felt like rock stars,” he later recalls. The sky seemed the limit.
But then it all fell apart. In 1986, Fink’s office suddenly lost $ 100 million when interest rates unexpectedly dropped. “He went from CEO on hold” to “excluded” overnight.
The making of a legend
The episode was a key step in Fink’s journey to becoming the undisputed “King of Wall Street” when he built BlackRock – “the greatest fund manager the planet has ever seen”, with nearly $ 10 billion. dollars under management. To put this in context, “this roughly equates to all of the global hedge fund, private equity and venture capital industries put together.”
A major shareholder in virtually every major US corporation – and several internationally – BlackRock is also one of the largest lenders to businesses and governments around the world.
Born in 1952, Fink grew up in Van Nuys, California to earn a degree in political theory, then his MBA at UCLA. He quickly emerged as “something of a legend on Wall Street”: credited, along with Salomon Brothers’ Lew Ranieri, with turning “sleepy backwater” bonds into a trillion dollar securitization market. dollars, says Vanity Fair.
Fink’s particular expertise was mortgage-backed securities. After leaving First Boston in disgrace, he started a new business funded and hosted by Blackstone – a rising star in the private equity industry. When the two companies divorced in 1994, BlackRock was born.
Fink, now 68, has always resented being among the “big swing dicks” immortalized in Michael Lewis’ account of the origins of the financial crisis, Liar’s Poker. He attributes the characterization to “the snobbery of the Wasp Wall Street investment bankers, who looked down upon Jewish and Italian traders who were only allowed to succeed in the mortgage bond business.”
But while its innovations ultimately brought “the economy to its knees,” BlackRock profited powerfully from the cleanup – becoming “the financial backbone of Washington and Wall Street,” says Vanity Fair. Who else, after all, was better placed to advise on toxic stock analysis?
The purchase of Barclays Global Investors in 2009, along with its “mountain” of exchange-traded funds (ETFs), propelled BlackRock to the forefront of the equity world, according to Fortune. Indeed, Fink has “supercharged” the world of passive index funds, according to the FT. “BlackRock has, in effect, done to invest what Henry Ford did for the car, building a financial assembly line that produces products for investors more efficiently than virtually anyone else.” Alongside Vanguard, Fink’s firm now benefits from a virtual “duopoly”.
A radical change in the industry
When Fink announced early last year that BlackRock would put sustainability at the heart of all of its investment decisions, it was seen as a sea change for the financial industry. Critics accuse him of “greenwashing” and worry about the concentration of power in a single company.
For some critics, BlackRock is “the new Goldman Sachs,” says the FT, and that puts Fink in the sights of agitators and reformers who argue the company is too big to fail. But “barring an epic shift in political or financial winds,” it’s hard to see what could throw BlackRock’s growth away. Fink’s reign “at the top of the financial ecosystem” shows no signs of ending.