By Suzanne McGee
(Reuters) – The U.S. Federal Deposit Insurance Corporation has told asset manager BlackRock (NYSE: ) it has until Jan. 10 to accept a deal that would give the agency increased oversight of its investments in FDIC-regulated banking institutions, according to a person familiar with the matter.
On Friday, the FDIC said it had reached a similar agreement with Vanguard strengthening the rules the asset manager must follow as a passive investor in FDIC-supervised banks, the latest step in a months-long standoff between the banking regulator and the two largest managers of index-based mutual funds and funds traded on the stock exchange.
The FDIC is pushing both firms to adopt “passivity agreements,” which give the regulator more tools to monitor compliance by asset managers while promising not to influence the business decisions of FDIC-regulated banks in which they invest.
An individual familiar with the state of negotiations between BlackRock and the FDIC said the company received the regulator’s latest proposal on Friday, less than an hour after the Vanguard deal was announced. That source said the text of the proposed agreement was “essentially the same” as that of the Vanguard Pact.
The FDIC declined to comment on Vanguard’s agreement or negotiations with BlackRock.
“We know that the CEOs and board members of major companies closely monitor the political statements of these mega-owners,” said Rohit Chopra, director of the Consumer Financial Protection Bureau and an FDIC board member, in a statement released Monday.
“If a large asset manager is really as passive as it claims, it should have no problem complying” with the kind of passive agreement the FDIC is looking for, Chopra said.
In a public comment letter submitted to the FDIC in October, BlackRock said it already has a legal commitment to the Federal Reserve Board that it will remain a passive investor in U.S. banks.
“BlackRock does not exercise control over FDIC-supervised institutions, nor does it seek to do so,” Benjamin Tecmire, head of regulatory affairs, said in the letter.
The FDIC did not say what consequences might follow if BlackRock does not meet the Jan. 10 deadline.
