BlackRock Receives Deadline From FDIC for Passivity Agreement

BlackRock, Inc. BLK has been informed by the Federal Deposit Insurance Corporation (“FDIC”) that it has until Jan. 10, 2025, to accept the “passivity agreement”. This was reported by a person familiar with the matter to Reuters.The “passivity agreement” allows the FDIC to increase the scrutiny of investments by BLK in FDIC-regulated banking institutions and its subsidiaries. Also, this will provide the regulator with additional tools to monitor compliance by BlackRock with pledges not to influence the business decisions of the FDIC-regulated banks in which they have a stake.Details of Agreement Received by BLKBlackRock received the latest passivity agreement on Friday from the regulator and the wording of the proposed agreement is said to be “substantively the same” as that of the Vanguard pact, which was accepted on the same day by Vanguard.This agreement is in response to the critics put forward by academics over the concerns regarding competitive risks of concentrated ownership and the concentration of power in a handful of institutional investors.Rohit Chopra, director of the Consumer Financial Protection Bureau and a member of the FDIC board, said on Monday, “We know that chief executive officers and board members of large companies carefully watch the policy pronouncements of these mega-owners.” “If a large asset manager is truly passive as it claims, it should have no problem complying, with the kind of passivity agreement the FDIC is seeking,” Chopra added.In October 2024, BlackRock, in a public letter submitted to the FDIC, stated that the firm already made legally enforcing commitments to the Federal Reserve Board to remain a passive investor in U.S. banks.Benjamin Tecmire, head of regulatory affairs at BlackRock, said in the letter, “BlackRock does not exercise control over FDIC-supervised institutions, nor does it seek to.”However, the consequences haven’t been mentioned by the FDIC if BlackRock doesn’t accept the agreement by the given deadline.BlackRock’s Zacks Rank & Price PerformanceYear to date, shares of BlackRock have gained 26.6% compared with the industry’s 36% growth.Image Source: Zacks Investment ResearchCurrently, BLK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Regulatory Hassles Faced by Other Finance FirmsEarlier this month, Deutsche Bank’s DB broker-dealer subsidiary, Deutsche Bank Securities Inc., was hit with a $4 million penalty by the Securities and Exchange Commission. The fine was levied due to DB’s failure to promptly file certain Suspicious Activity Reports as mandated by the Bank Secrecy Act (“BSA”). These rules are issued by the U.S. Department of the Treasury's Financial Crimes Enforcement Network.Similarly, Bank of America, Corp. BAC received a cease-and-desist order on Dec. 23 from the Office of the Comptroller of the Currency, addressing the deficiencies under the BSA and sanctions compliance programs.The recent order against Bank of America is based on violations, inappropriate and unsafe practices concerning these programs alongside a failure to timely report suspicious activity and rectify shortcomings related to its Customer Due Diligence processes identified earlier.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 228 positions with double- and triple-digit gains in 2023 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Bank of America Corporation (BAC): Free Stock Analysis Report BlackRock, Inc. (BLK): Free Stock Analysis Report Deutsche Bank Aktiengesellschaft (DB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks