Senator Elizabeth Warren singled out investment firm BlackRock, Inc. at a hearing held by the Senate Banking Committee.
Warren said that the Biden administration should be more concerned about the company given that it manages more than $9 trillion in assets - more than the annual gross domestic product of any country outside of the U.S. and China.
At the hearing, Warren directly asked Treasury Secretary Janet Yellen what the country is doing to ensure that BlackRock is kept in check. Warren said that the Federal Reserve should designate the company as "too-big-to-fail" - a designation given by the agency to large banks under the Dodd-Frank Act.
Under the bill, which was passed after the 2008 financial crisis, the Federal Reserve is given stronger oversight by Congress for private institutions under the "too-big-to-fail" designation. The bill also resulted in the establishment of the Financial Stability Oversight Council, which is tasked with overseeing and scrutinizing banks and companies controlling more than $50 billion in assets.
"If a $9 trillion investment company failed would that likely have a significant impact on our economy?" Warren directly asked Yellen during the hearing.
In response to her question, Yellen said that it was more important to scrutinize any company's actions as opposed to focusing on designations. She cited the moves made by the FSOC in 2016 and 2017 as examples of how the council had sprung into action after investigating the possible impact of the massive withdrawals at open-end mutual funds.
"With respect to asset management, rather than focus on designation of companies, I think it's important to focus on an activity like that and consider what the appropriate restrictions are. It's not obvious to me that designation is the appropriate tool," Yellen said.
Warren was clearly dissatisfied with the response and fired back that designations are what gives the Federal Reserve the power to oversee a company's operations.
BlackRock issued an official statement in response to the hearing. The company said that the money it manages does not belong to the company. BlackRock did say that it fully supports regulatory reform if it benefits all parties involved.
"Well-functioning capital markets are critical to building a resilient economy that allows more people to experience financial well-being. We support financial regulatory reform that increases transparency, protects investors and facilitates responsible growth," BlackRock said.
