It’s been a difficult couple of years for BlackRock, the world’s biggest money manager. The firm is still enormously profitable, though it has recently taken some big hits because of its image as a promoter of progressive utopianism through its use of Environmental Social Governance — or ESG — investment guidelines.
Red state government officials are defenestrating the company from managing their pension money. The conservative commentariat has blamed the firm’s ESG screening of stocks for higher gas prices and inflation. The rap against BlackRock is that it promotes investing in “sustainable” energy sources but incentivizes oil companies to stop drilling. Larry Fink, its voluble founder and CEO, has been branded as some sort of C-suite leftist.
The truth is always more complicated than political agitprop, of course. Fink is really a moderate Democrat aside from being an excellent risk manager during a successful 50-year career on Wall Street. BlackRock’s pure ESG portfolio is just a small percentage — $700 billion — of its $10 trillion in total assets under management.
Yes, Fink loves to talk, and he has evangelized, maybe too much, about the necessity of going green, how climate change is a long-term threat to the economy and an investment opportunity. He says that the sustainable economy could be similar to the tech boom — throwing off millions of new jobs and creating trillions in new wealth. And so on, and so on.
Yet, Fink isn’t quite an ESG zealot as portrayed. He has also said the green economy needs to be done in a transition or you will get the inflation we have now. The vast working class can’t afford electric cars. Plus, you won’t ever hear the letters E-S-G coming out of his mouth again. That’s right. The whole thing has become so politically toxic Fink has banned it from his vocabulary.
“You can say it, but I won’t,” Fink recently told me before expounding on the need for sustainable energy sources.
Yes, Larry can be a handful, and the red-state pension opposition isn’t letting up. It’s why my sources inside the company say BlackRock’s flacks and marketing teams are working overtime to come up with a new, coherent message that fully explains the company’s ESG work and removes it from the current increasingly nasty political debateover the matter.
It won’t be easy. BlackRock’s messaging pickle was on display Tuesday night during a “summit” of business and finance execs sponsored by the news outlet Semafor when its business editor, Liz Hoffman, interviewed a man named Mark Wiedman, head of BlackRock’s global client business.
Given how many people invest with BlackRock, Wiedman is a pretty big deal in the firm. He is on the company’s short-list to replace the 70-year-old Fink when he retires, as is expected in the next few years.
Despite its attacks from conservatives, Wiedman said ESG is a “capitalist impulse . . . a demand from clients.” Fair point. Larry Fink and BlackRock didn’t create the demand from blue-state pension officials and other virtue-signaling investors who want ESG porfolios.
He then got to why BlackRock management is grappling with how to message ESG. BlackRock’s problem, Wiedman suggested, can be traced to talking too much about ESG.
“Speak softly and invest money,” he said, “We don’t need as much talk,” he said, “ so we’ve been a little quieter because actually, that’s what our clients are looking for.”
Good luck with keeping Larry quiet.
SBF’s farce of a defense
The trial of accused crypto fraudster Sam Bankman-Fried, a.k.a the Notorious SBF, started last week. The odds of him getting exonerated are pretty low. A mountain of evidence against him comes from former co-workers who say he agreed to pilfer customers’ assets from his FTX crypto exchange to cover up billions of dollars of losses in his affiliated crypto hedge fund and to finance his lavish, jet-setting lifestyle that obviously didn’t include his personal hygiene.
Who knows what a jury might think, but I’ve covered dozens of white-collar fraud cases, and given all of the above, this case seems as airtight as they come. Maybe that’s why SBF’s lawyers are throwing a Hail Mary crafting what is best described as a “Sgt. Schultz defense.”
Schultz was a German prison guard in the utterly absurd World War II sitcom from the ’60s and early ’70s called “Hogan’s Heroes.” Kind-hearted and playing the part of a fool, Schultz allowed the titular character, Hogan and his band of POWs to escape whenever they wanted to sabotage stuff and return back to camp only to do it all over again. After seeing it all, Schultz would exclaim in a thick German accent: “I see nothing! I hear nothing! I know nothing!”
I’m pretty sure the 31-year-old SBF never heard of Sgt. Schultz, but he and his lawyers are certainly channeling the character’s fake obliviousness. As the trial commenced, SBF’s lawyers argued that the former crypto billionaire and wunderkind — as he feted celebrities and athletes to tout FTX, rubbed shoulders with rich and powerful investors, and wooed all those politicians about how he was making money to make the world a better place — was really a well-meaning stooge. Despite his degree in physics and math from MIT (he’s supposed to be good at figuring stuff out), he was easily hoodwinked by others at the company, including his ex-girlfriend who ran the hedge fund known as Alameda Capital.
What made “Hogan’s Heroes” work and Sgt. Schultz hilarious (at least for me when I was a 10-year-old) was that it was all such a crazy, comedic farce.
When you’re staring at possibly life behind bars, like SBF is, best not to have a defense that’s a joke.