October 11, 2012 9:31 pm

Geithner has phone friend at BlackRock

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Geithner on the phone©AFP

When Tim Geithner, US Treasury secretary, wants a first-hand account of how financial markets are interpreting government policies or reacting to the latest crisis, the man he turns to most often is Larry Fink of BlackRock.

Mr Fink, the group’s chief executive, featured more frequently in Mr Geithner’s diary during an 18-month period than any other corporate executive, according to a Financial Times review. The two men spoke on at least 49 separate occasions, an average of about once every 11 days.

Calls and meetings with Mr Fink throughout 2011 and up to the end of June this year outnumber the combined calls and meetings with the heads of the six largest US banks by assets. Mr Geithner’s second most frequent interlocutor in the corporate world was his old boss, Robert Rubin, the former Treasury secretary now at Centerview Partners, who spoke to him 33 times in the same period.

Mr Geithner’s calls with Mr Fink far outnumber those with executives at other investment groups such as Pimco, Fidelity, and AllianceBernstein.

Mr Geithner’s diary, which is open for public inspection, records all official interactions, including with administration officials, bureaucratic advisers and business executives.

It notes frequent conversations with one-time colleagues in public life, including Larry Summers and Hank Paulson, two former Treasury secretaries.

BlackRock declined to comment on Mr Fink’s conversations with Mr Geithner.

The Treasury said: “The secretary routinely speaks with a broad range of stakeholders and market participants regarding domestic and international economic matters.”

The calls tallied by the Financial Times include those placed by Mr Fink as well as by Mr Geithner. They usually ranged from five to 10 minutes. Meetings recorded in the calendar with groups of unnamed business executives, which may have included bankers, were not included in the count.

Mr Geithner’s diary does not include his staff’s conversations with other finance industry executives.

The close relationship between Mr Fink and Mr Geithner, which dates back to Mr Geithner’s days heading the Federal Reserve Bank of New York between 2003 and 2009 reflects how governments have turned to the asset manager as a trusted adviser after the financial crisis.

BlackRock helped the Fed manage the securities it acquired through its bailout of AIG and advised on its rescue of Citigroup. It has counselled European governments struggling with faltering lenders and has provided services to US government agencies, ranging from monitoring Fannie Mae and Freddie Mac the mortgage giants, to valuing toxic securities acquired by the National Credit Union Administration.

Mr Fink’s client base also explains why he and Mr Geithner chat so often. With $3.6tn in assets, Mr Fink oversees the world’s largest money manager.

Some prominent former government officials have joined BlackRock, which has seen its clout grow since the financial crisis. Its reputation has been enhanced after BlackRock advised prominent investors and governments around the world.

On June 14, the day after BlackRock announced that it had hired Philipp Hildebrand, the former chairman of the Swiss central bank, who had resigned from that post five months earlier after currency trades by his wife, Mr Geithner called and they chatted for 10 minutes.

Mr Geithner plans to retire from the Treasury after the election.

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