BlackRock faces Jan. 10 bank equity compliance deadline as FDIC scrutinizes investor rights: Report – BlackRock (NYSE:BLK), iShares US Financial ETF (ARCA:IYF)

Federal Deposit Insurance Corporation and BlackRock black Jan. 10 is a key deadline for new compliance measures affecting asset managers’ stakes in U.S. banks, marking a significant development in the ongoing debate over the influence of institutional investors in the banking industry.

what happenedThe FDIC is urging BlackRock, which manages $11.5 trillion in assets, to accept enhanced regulatory requirements when it holds more than 10% of shares in FDIC-regulated banks, the Financial Times reported, citing sources.

The move follows rivals pioneerBroader Federal Deposit Insurance Corporation (FDIC) oversight and expanded passive agreements were recently agreed to cover banks within large holding companies.

BlackRock’s holdings in 39 community and regional banks in the United States exceeded the 10% threshold, triggering regulatory concerns. In an October comment letter, BlackRock strongly opposed the proposal, arguing that it would “harm investors, disrupt the flow of capital into the economy, and undermine the effectiveness of existing regulations.”

in its iShares US Financial ETF international youth federationBlackRock’s largest bank holding is located in JPMorgan Chase & Co., Bank of Americaand Wells Fargo.

BlackRock and the FDIC did not immediately respond to Benzinga’s requests for comment.

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why it’s important: The conflict reflects growing regulatory scrutiny of the influence of major asset managers over the financial sector. Harvard Law Professor John CoatesThe 2023 book The Twelve Question warned of the unprecedented concentration of voting power, noting that major index funds combined control more than 20% of the voting power of S&P 500 companies.

Federal Deposit Insurance Corporation Director Jonathan McKernan Highlighted the need for strong compliance measures, particularly for companies like BlackRock, Vanguard and State Street Bank Continue to increase holdings through index funds.

Although BlackRock proposed alternative passive agreements in December, those agreements fell short of compliance measures accepted by Vanguard. The FDIC’s January deadline comes as the agency anticipates new leadership following an upcoming change of administration.

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Image via BlackRock

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