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Regulator probes BlackRock and Vanguard over huge stakes in US banks

Livemint · 8m

Banking regulators are closely examining BlackRock, Vanguard, and State Street, three major index fund managers, to ensure that they are adhering to their passive investment roles when it comes to their holdings in US banks. These firms collectively manage over $23 trillion, much of which is invested in funds that mimic popular indexes. Regulators are concerned about the ownership and control of banks because of their importance to the economy. Currently, the largest asset managers are exempt from certain banking regulations as long as they remain passive, but this approach may soon change as regulators, including the Federal Deposit Insurance Corp (FDIC), aim to enhance their monitoring of these firms. There is bipartisan support within the FDIC for closer scrutiny of the holdings of BlackRock and Vanguard. Concerns have been raised in Washington about the influence of index fund managers on corporate America and their ability to sway important corporate decisions through voting power.