Investing other people's money is, at first glance, a win-win situation; even in the worst case scenario, you are only losing someone else's money. In practice, however, inept management of other people's finances can lead to such a number of problems that it is better not to meddle in this area without the proper skills. Larry Fink had no problems with the necessary skills - even despite the fact that there were quite high-profile failures in his career, he is still considered one of the leading investment specialists in the country and the world.
Lawrence Douglas Fink is an American financier, chairman and CEO of the American multinational investment corporation BlackRock, the world's largest money management company by total resources controlled.
Fink grew up in a Jewish family in Van Nuys, California; his mother was an English professor, his father owned a shoe store. In 1974, Fink received a bachelor's degree in political science from the University of California, Los Angeles; T
Same, but only later - in 1976 - he received a Master of Business Administration diploma.
In 1976, Fink began to put the acquired skills into practice; He got his first job at New York's largest investment bank, First Boston. Ultimately, Lawrence managed to take control of the entire bank's fixed-interest securities department; Fink played a key role in the creation and development of the American mortgage-backed securities market. Among other things, Larry held the position of member of the bank's managing director.
theta, Managing Director and was one of the heads of Taxable Fixed Income. He was also in charge of the mortgage department, the real estate department and the financial futures and options division. In total, Fink brought about $1 billion to the bank; alas, in 1986 his reputation at the bank was somewhat damaged - his group incorrectly predicted future changes in interest rates, losing $100 million. This incident influenced in many ways
on the decision taken by Fink on the need to create its own company, capable of investing client funds and at the same time having a clear and comprehensive risk control system.
Fink created the BlackRock company in 1988, under the general “umbrella” logo “The Blackstone Group”; In the company he received the position of CEO.
In 1994, Blackrock separated from Blackstone; Fink retained his position, and the enterprise as a whole acquired a much more independent status.
In 1999 the company
became public.
In 2003, Larry Fink helped negotiate the resignation of Richard Grasso as CEO of the New York Stock Exchange; The hype around Grasso’s person was connected primarily with his substantial earnings - he received about 190 million.
In 2006, Fink oversaw the merger of his company with Merrill Lynch Investment Managers; The merger nearly doubled BlackRock's resource portfolio. In the same year, the company bought a residential complex for 5.4 billion
in Manhattan, which became the largest residential real estate transaction in US history. This deal also ended in a very, very impressive failure; The company's clients lost their invested funds in an impressive amount - for example, the California pension system lost almost $500 million.
After the financial crisis of 2008, the US government turned to BlackRock for help; Fink was renowned for having fairly stable relationships with a number of leading government officials
This made him a rather valuable resource, but also made him think seriously about possible conflicts of interest when organizing government contracts.
Fink married his wife Laurie in the mid-70s; they are together to this day. The couple owns homes in Manhattan, North Salem, New York and Vail, Colorado. Laurie and Larry have three children; Fink's eldest son, Joshua, is CEO of the hedge fund Enso Capital.
BlackRock is the first transnational corporation that manages investor funds, which has become a household name for large funds, making its creator Lawrence Dulgas Fink a legend in trading circles as the first financier to go beyond the borders of one state.
Biography
The legendary manager was born in Los Angeles on November 2, 1952. In the family that raised the future financier, no one had anything to do with the market - the mother, being a professor at the university, taught English, the father was the owner of a shoe store.
Lawrence Fink received his higher education with a specialization in political science (1974) at the local University of California, and completed his master's degree there with a degree in Business Management (1976).
After studying, the aspiring trader got a job at one of the famous investment banks in New York at that time - First Boston, which was replaced by the BlackRock organized fund under the BlackStone corporation brand in 1988.
The Trader's Path
The trader made his first transactions on Wall Street as an intern in 1976. These were purchases of fixed income instruments - mortgage bonds. The trader was interested in real estate while still a student, having completed special courses.
Financial sharks from Wall Street admit that Lawrence Fink practically created this line of mortgage securities (predetermining the 2008 crisis).
The successes of the young trader led him to the chair of the department manager; by the age of 31, Lawrence Fink’s activities had enriched the bank by more than $1 billion.
In 1988, with funds from the BlackStone Corporation ($5 million) under a single brand, Lawrence Fink opened the BlackStone Term Trust fund.
The fund was renamed in 1992, bringing together $17 billion in investor assets under the BlackRock brand, reaching $54 billion a year later. Lawrence Fink decided to go “under the wing” of PNC Financial (1995). The cooperation was mutually beneficial, using the branch network, the fund began to acquire transnational connections and assets, and investor capital increased to $165 billion in 1999. In the same year, the manager decides to distribute shares of the fund's ownership among employees and go public.
Further growth of the fund was ensured through mergers and acquisitions of competitors. In 2004, the amount of assets exceeded $342 billion, but BlackRock came to the top after 2006, when one of the major acquisitions took place in the financial markets - Merrill Lynch Investment Managers, the record of which was broken after the crisis in 2009.
The second record belonged to Barclays Global Investors - a diamond that gave Lawrence Fink the opportunity to enter the markets of specialized ETF funds. Fink raised funds from sovereign wealth funds and became the most influential businessman of the decade - advising world governments at the interstate level.
While the capital under management of BlackRock is almost 5 trillion. dollars, Lawrence Fink's personal capital is estimated at $340 million.
Contribution to trading
All fund traders combine instruments and investments under one project - the Aladdin platform - a risk assessment system that Lawrence Fink has been working on since 1988. It is believed that thanks to her, the fund managed to become the largest in the world in terms of the number of assets.
Family
Lawrence Douglas has been married once since his student days to this day. Raised three sons. The eldest of whom followed in his father’s footsteps - he runs a hedge fund, but away from his father’s brand, he was hired by Enso Capital.
The family's main funds are invested in expensive real estate - houses in Manhattan, North Salem, New York.
Lawrence Dulgas initiated the fund's largest acquisition, a Manhattan residential complex. The transaction amounted to $5.4 billion, bringing a half-billion loss to the investor participants.
The financier was prompted to open the BlackRock fund by the 100 million losses that he brought to the First Boston bank due to an incorrect assessment of future
The history of the largest investment company in the world BlackRock
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In 1988, financier Larry Fink created the investment company BlackRock. Every year Fink's brainchild became larger and richer. The company now owns 5.7% of Google shares, and the volume of assets under management of BlackRock is $4.89 trillion. A site observer spoke about a relatively unknown, but at the same time huge company and the personality of its founder.
BlackRock office in London
Over the past ten years, no financial company in the world has surpassed BlackRock, a black rock that manages trillions of dollars of its investors' funds. Dozens of Quora users ask how to get and pass an interview at this company, and the lucky ones who have already done it share their experience and say that it is not so easy.
The company owes its success to co-founder and CEO Larry Fink. Despite the fact that there were eight founders, BlackRock's success is often attributed to Fink, although management does not forget about the remaining 13 thousand employees, writing them huge checks and paying them five-figure compensation.
BlackRock has $5 trillion in assets under management. The company has 70 offices in 30 countries, and BlackRock clients and partners include Deutsche Bank, Bank of Greece, UK Treasury, AT&T, Google and Morgan Stanley.
Larry Almighty
The older Lawrence Fink got, the more often he was called Larry. Despite the enormous power attributed to Fink, few people know about the identity of the founder of BlackRock. The 63-year-old financier has worked hard to become the most influential person in the finance industry, and he started from childhood.
Larry Fink was born into a Jewish family in California. My parents were not even remotely connected to the finance industry - my mother was an English professor, and my father owned a small shoe store. Fink never talks about whether he consciously chose the profession of a financier, but his education suggests exactly that. He attended the University of California and received a bachelor's degree in political science in 1974. The next step was an MBA degree, which Fink received in 1976 from the University of California School of Management.
After receiving his master's degree, Fink immediately began working. BlackRock's success is largely attributed to the extensive experience of its founders, who all spent at least ten years working at other financial firms before launching their fund. Fink's first job was First Boston, an investment bank in New York. During his ten-year career at First Boston, Fink was a manager, then managing director, and then head of the tax and mortgage departments.
Larry Fink
Fink's successful career lasted exactly ten years. In 1986, he made a mistake in forecasting the rise in mortgage interest rates and his department lost $100 million. “I screwed up,” Fink recalls, “And it was very bad.” Despite the seriousness of the mistake, Fink's career at First Boston was successful - he brought the bank more than $1 billion in profit.
The worst moments of Fink's career earned him the nickname "big swinging dick," the name given to Wall Street's most brazen and aggressive bond traders. Years later, Fink parried the insult by accusing investment bankers of snobbery. “Italian and Jewish traders were closed to any industry other than bonds,” said the financier.
The loss of $100 million prompted Larry Fink to create his own company, which would not only invest clients' money, but also conduct a thorough risk analysis.
According to Forbes, in the ranking of the most influential people in the world, 63-year-old Lawrence Fink, who had a fortune of $340 million in 2012, known in business circles as Larry, ranks 34th, having risen five positions in this list since 2014 . The huge assets of the BlackRock company he heads allow Fink to be considered the world's largest figure in the financial industry.
It is not surprising that he has become the first person to be called by representatives of authorities and business structures when there is a need to assess the prospects of a particular business project. His past and present clients and partners include the Federal Reserve Bank of New York, Google, and the Queen's Treasury. The fate of pension savings belonging to millions of ordinary workers depends on the investment policy chosen by Fink, since almost all major American pension plans are managed by BlackRock.
Lawrence Douglas Fink is the founder, chairman and CEO of BlackRock, Inc. Under Fink's leadership, it has grown over the two decades since its founding to become a global leader in investment and risk management and advisory services to institutional and retail clients. Today, this company is entrusted with managing more money than any other investment firm. Larry Fink was named one of the "World's Most Admired Leaders" by Fortune magazine in 2016, a "CEO of the Decade" by Financial News in 2011, and Barron's named him one of the "World's Best CEOs" ten years in a row. Larry Fink frequently gives interviews, speaks at meetings, and is active in the community. He is a member of the Board of Trustees of New York University and co-chair of the Board of Trustees of NYU Langone Medical Center, and serves on the boards of the Museum of Modern Art (MoMA), the Council on Foreign Relations, and Robin Hood, a philanthropic organization fighting poverty. Fink also serves on the executive committee of the Partnership for New York City, an economic development organization.
A brilliant career was ruined by an erroneous forecast
Larry Fink lives in New York, is married with three children. He was born on November 2, 1952, near Los Angeles in the Van Nuys area, in the densely populated state of California. His father owned a shoe store, his mother taught English. According to Larry, he was "just a kid from Los Angeles." Fink received a bachelor's degree in political science from the University of California, Los Angeles (UCLA) in 1974 and an MBA with a concentration in real estate finance from the UCLA Anderson School in 1976. At the age of 23, as a long-haired youth wearing turquoise jewelry, he went to work on Wall Street. Having no shortage of job offers at major investment banks, he chose First Boston, where he was assigned to bond trading, which was then rather sluggish. Three years later he was put in charge of what was then a virtually unknown business: trading in mortgage-backed securities.
Look,
Over the next decade, Fink would become something of a Wall Street legend. Together with Lew Ranieri of Salomon Brothers, he pioneered the multitrillion-dollar debt securitization market that changed the face of the financial industry. By 2008, this market - mortgages, car and card loans bought from banks, sliced up, repackaged and sold to thousands of investors - will bring the economy to the brink of an abyss. But long before this explosive mixture got out of control, its creation was considered an incredible breakthrough. According to Fink, his work in the field of mortgages has reduced the cost of housing in America. According to some estimates, the financial instruments he created and sold brought First Boston Corporation about a billion dollars in net profit, and the well-deserved reward was not long in coming. He became the youngest managing director in First Boston's history and the youngest member of its management committee. After such a rapid career rise, many thought that he would eventually even lead the entire corporation.
Alas, fate decreed otherwise after his department suffered a $100 million loss in the second quarter of 1986. Fink's traders took on a huge position based on his forecast that interest rates would rise. And when instead they suddenly fell, not only the transactions themselves were swept away by the market forces, but also the mechanisms created to hedge them. Almost overnight, Fink says, he went “from star to dunce.” People stopped talking to him in the corridors, and he felt all the delights of ostracism. On Wall Street, the end of Fink's career at First Boston is remembered as one of the most spectacular and humiliating scandals to come to light. “Public and really scary,” is how one senior financier described it. With all this, Fink believes that he was not fired by order, although this does not matter much, since in the American financial world there are many different methods of getting rid of employees who have fallen out of favor. When, after two years of being in disgrace, he finally left First Boston in the spring of 1988, the company, throwing a ball of dirt after him, tried to make Fink’s dismissal look like it was done under duress.
The new company developed rapidly, relying on technical and methodological innovations
In 1988, as part of The Blackstone Group, Fink founded what would become a financial industry supergiant with seven partners. At the time, it was located in one room, but all its employees firmly believed that they could build the best asset management firm. Initially working in fixed income, she later showed a knack for developing new businesses in the area of closed-end funds and trusts, one of which was the Blackstone Term Trust, which raised a billion dollars and put the business on a path of sustainable growth. The now famous technological project “Aladdin” was also developed - an investment platform where, according to the creators’ plans, trading, risk management and client reporting were to come together. In 1992, the firm changed its name to BlackRock and amassed $17 billion in assets under management; by the end of 1994, they had grown to $53 billion. “Aladdin” turned out to be a good idea, it allowed the company to stand out from a number of competitors and formed the basis of the BlackRock Solutions project. Today, the Aladdin platform has become BlackRock's "central nervous system" and powers the collective intelligence of its employees around the world, helping them gain complete market insight and make the right decisions.
In 1995, BlackRock became a subsidiary of the bank holding company PNC Financial and began managing open-end mutual funds, including equity funds. The association with PNC gave BlackRock access to the company's broad distribution network and opportunities to diversify through alliances and mergers with its equity and other investment subsidiaries. As the firm expanded its profile, it developed the idea of “one BlackRock,” which became the core tenet of its business philosophy. While many companies included autonomous business units, BlackRock embraced the idea of operating on a unified platform. In managing fixed income, equities and other assets, BlackRock has maintained a client-centric business model that leverages all of the firm's resources and products to benefit its clients. In 1999, BlackRock went public and transferred a significant share of ownership to its employees. By the end of that year it had $165 billion in assets under management, a figure that had risen to $342 billion by the end of 2004.
Acquisition of major competitors and business expansion
By 2005, BlackRock's strengths had become fixed income, equities and advisory. The firm went through a number of mergers that expanded its investment activities. At the beginning of 2006, Merrill Lynch Investment Managers was acquired, after which both BlackRock itself and the global reach of its business grew significantly. The biggest merger came in 2009, when BlackRock acquired Barclays Global Investors, giving the firm additional capabilities in ETFs, index funds and active funds. Building on previous projects, including BlackRock Solutions, the company began providing advice through the Financial Markets Advisory (FMA) structure. Today, FMA advises governments, financial institutions, public and private capital markets organizations around the world on investments and associated risks. To date, rapid development and expansion has allowed BlackRock to become a leading transnational investment corporation. It serves many of the world's largest companies, pension funds, organizations and public institutions, as well as millions of people at all levels of wealth.
As of December 31, 2015, assets under management of BlackRock Corporation amounted to $4.6 trillion; on June 30, 2016, they reached $4.89 trillion. The firm offers a wide range of products and services tailored to different asset classes and regions based on their investment strategies. BlackRock has 135 investment teams distributed across thirty countries.
In its search for opportunities to improve productivity, the company tries to balance risk and reward in all its investment plans, and it also tries to analyze the current economic situation more carefully than its competitors. BlackRock is constantly looking for ways to ensure the long-term sustainability of its business. The need to support the sustainable development of the company was taken into account when drawing up its business model and when developing a customer service system, in which building relationships with local communities plays a special role. The company values solid professional knowledge and an unquenchable thirst for learning. The firm's employees must have a wide range of qualifications that extend beyond their core responsibilities. The company considers continuous communication between its employees to be another critical key to success, allowing it to assemble investment teams from partners who have accumulated experience in a wide variety of financial fields. The firm continually improves its approach to doing business and is proud of its long history of business innovation.
From a high podium he spoke about the state of the modern economy
In 2012, in New York at the Council on Foreign Relations, Larry Fink gave a long keynote speech in which he shared his views on the then difficult economic situation. At the beginning of the speech, he noted that despite all the encouraging signs of economic recovery and the rebound of falling markets, he had a nagging feeling that everything was not going as it should. Due to the fact that today people are closely connected with each other on a global scale, residents of different parts of the planet have felt something similar. On the one hand, every CEO Fink met—and he met many economic leaders from a wide range of countries—first reported the same observation: their business was doing a little better than they had planned. Then they all said that despite all this, things were not going as they should, and in some respects they were going very badly. That is why, lacking confidence in the future, company executives preferred not to spend corporate profits, even as they watched them gradually accumulate. Across social and business circles—from family conversations around kitchen tables to stock exchange floors to street protests in Athens, London, and Manhattan—the same trend was evident: “people are angry; they're upset, they're confused." They were concerned about stagnating incomes and, of course, the erosion of savings. They were worried that the government's promises of a secure old age were simply impossible to fulfill, so people were looking for a new leader and wanted answers to their questions.
According to Fink, at that moment a broad crisis of confidence had powerfully paralyzed the ability of economic leaders to make long-term decisions. A significant part of the problem, however, was their inability to keep up with the latest news as it changed by the minute, on every blog, or on every website. The information coming from there could be varied and touch on such general political issues as the state of the Greek debt, they could also focus on local problems like gasoline prices. In today's wired world, people are simply bombarded with huge volumes of information and news, and even if the news comes mostly positive, it can still be very difficult to separate the good from the bad in their flow. This influences the business decisions of every entrepreneur - from the office on the street corner to the pharmacy on the other corner - and has a profoundly destabilizing effect on markets, leading to dramatic fluctuations in the trading process. As a result, a narrowing time horizon not only for investors, but also for politicians and business people, as well as a fixation on the short term, blinds society. The new world thus emerging is being driven by three far-reaching and intertwined trends that are undermining markets, economies and the well-being of many sectors of society.
Main destructive processes
The biggest, yet most overlooked, trend is the rapidly aging global population. According to the UN, the group of people aged over 60 was expected to roughly triple to two billion by 2016, more than doubling the growth rate of the rest of the population. This phenomenon is already producing major deformations throughout the global economic system. While increasing life expectancy should be seen as a good thing, many older adults today fear outliving their savings. In the United States alone, the cumulative underfunding of Social Security and health care over the 75 years since 2012 is expected to exceed $40 trillion. According to BlackRock, American pension funds were underfunded by an average of 33 percent at the end of 2011. According to its data, the average defined contribution pension plan was underfunded by more than 40 percent.
At the same time, there has been an unprecedented simultaneous withdrawal of both financial and human capital from the economic system throughout the world. Fink illustrated this phenomenon using the example of Japan. It has long had one of the highest savings rates in the world, which has helped finance both the American government and the deficit budgets of many other governments around the world. However, Japan has one of the oldest populations in the world, so it will soon transform from a collector of assets to a seller of them. This shift will have a significant impact on the world in general and the size of government deficits in particular. Unfortunately, significant aging occurs simultaneously with large-scale debt repayments. Spurred by the recent severe mortgage crisis, the financial and corporate sectors, as well as households in the developed world, continue to reduce their debts and reduce risks. It is this long-term trend that will henceforth shape investment policy and change the ratio of income and expenses. As The New York Times noted, these developments could transform Americans from a nation of homeowners into a nation of renters, even as rental prices rise and home prices fall at near-record levels.
Global deleveraging is now worsening as governments implement their austerity plans. Government authorities will no longer be the source of job growth, as they were many years ago in the United States. Job creation will therefore require much closer collaboration between government and business. This problem is trending to become even more complex as the engines of global growth shift significantly to emerging markets. And while this shift in economic opportunity will, over time, create a more sustainable world, for now it has visibly fueled widespread anxiety, supporting global income inequality everywhere at both ends of the shift. Those masters of global economic management have come to terms with this phenomenon and even benefited from it, but many other participants in international trade exchanges have had to settle for being laggards. That's why we shouldn't be surprised by the social unrest that this rift sparks, be it Occupy Wall Street or the Arab Spring with its powerful economic undercurrents.
Fear of investing led to a sharp increase in funds placed on deposits
As a result, we are already in a perfect storm, driven by an aging population, government deleveraging, the relocation of jobs to other countries, and rising income inequality hidden beneath the surface of low growth and low profits. This brutal storm comes at a time when people need higher incomes and greater economic opportunity. In the midst of this perfect storm, when everyone is waiting to see which way the new prevailing winds will blow, when confidence in the future is extremely low and volatility is very wide, Fink is asked the same question no matter where he is. “I could be in Abu Dhabi, Beijing, Sao Paulo, Zurich or right here in Manhattan. The question is simple: “What should I do with my money?” Whether the question comes from an individual, a corporation or a pension fund, Fink's answer is always the same: “You have to get off the sidelines and make your money work again.” It is the only way people will achieve their financial goals, the only way corporations will grow, the only way pension funds will meet their obligations, and the only way governments will be able to meet the big public policy challenges facing them. citizens. Whether it's funding retirement, supporting education, or rebuilding infrastructure, it's all feasible if growth returns. Therefore, to solve the world's problems in the new environment, it is necessary to turn money savers into investors at every level of social and corporate hierarchies.
As people lose confidence in the future, they are starting to build up their short-term savings, so bank deposits were expected to rise to $10 trillion by the end of 2012, nearly doubling from 2004's $6 trillion. According to Fink, investors held too much savings in short-term deposits, for example, in China, even despite its impressive growth. The continuation of this trend meant the need to finance economic growth from other sectors. Likewise, non-financial companies in the S&P 500 held more than $1 trillion in cash in the fourth quarter of 2011. For big-money CEOs, this ultimately meant lowering their companies' price-to-earnings ratios, a financial metric equal to the ratio of a share's market value to its annual earnings per share.
“So what should we do? Fink asks. - How do we make all the money work again? How do we restart long-term investing and growth?” First, we need to help investors adjust to the new world. Building confidence in long-term investing is a common interest, but Fink would be the first to say that the asset management industry has not done a good job of helping investors take a long-term view. He believes that financiers had a responsibility to take the initiative by offering investors guidance on this issue and providing them with the necessary explanations. In order to support a longer life financially, it is necessary to convince people to start investing now, and with a view to a long period of time. Longevity should be an asset, not a material disaster. People need to understand that freezing money in the form of cash has a cost that no one talks about. You hear about the cost of volatility, the cost of making bad short-term decisions, but no one talks about the cost of inaction. It is important to understand that while sitting on money, even with low inflation, people are unable to afford to retire and will therefore continue to work, thereby robbing the next generation of economic opportunity and pushing youth unemployment rates even higher than those they have already reached. Asset managers should talk to investors about the need to counteract the growing gap between the need to retire and the ability to do so, drawing on existing savings. Companies that employ future retirees also bear a moral responsibility for conducting this educational work.
Measures to overcome the financial impasse
This noble initiative means moving investors beyond the now outdated policy of 60% stocks and 40% bonds. Fink said many times that he himself would invest one hundred percent of his funds in stocks. This suits his risk profile and his world view, although of course this philosophy will not suit all investors as most need a more diverse portfolio. However, almost every investor must find ways to earn greater returns than he would get by holding his capital in cash or government bonds. It makes sense to consider other sources of income for this, such as dividend stocks, high-yield corporate bonds, the simultaneous use of passive and active strategies, as well as alternative investments that are now becoming more accessible to individuals. The financial community and government can help thrifts become investors by finding common regulatory solutions that will increase confidence in market stability.
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There needs to be financial products and integrity that allow individual investors to know exactly what they are buying, as well as to disclose the risks involved and the true value of the assets. The financial industry needs a tax structure that promotes long-term growth, particularly a capital gains tax that encourages long-term investment. According to Fink, the holding period for an investment to qualify for the long-term capital gains tax treatment should have been extended from 12 months to three years, with the rate falling further the longer one held the investment. Finally, governments need to adopt a long-term investment plan. Just as people and organizations must be aware that they may not expect profits in one quarter or one year, governments must be sensitive to investments that may not generate returns for years. “We need government leaders who are willing to rise above partisanship and make forward-looking investments in crumbling infrastructure and basic research,” Fink said on the matter.
And perhaps the most important long-term investment a society can make is education—an antidote to today's short-term hustle and bustle, a means to critically evaluate current events, an opportunity to see long-term strategies, and to adapt to the competitive demands of the current information age, which requires technological knowledge even from representatives of unskilled professions. According to Fink, the transformational challenges and crisis of confidence facing the global community are daunting. But people today are better equipped to respond to emerging threats than at any other point in history. After all, they have unique knowledge and experience, financing and planning tools, technology and analytics, and are connected around the world through devices that were simply unimaginable just recently. In this new world, confidence can be restored that markets will move again, growth will return, and people trying to save money for short-term needs will turn into long-term investors. Fink believes that the responsibility for achieving this goal lies with business leaders, financial industry leaders and government leaders. They must all come to understand this, and they must all begin without delay to meet the challenges posed by the new century.
“One of the key elements of human behavior is the fact that people experience greater fear of loss than pleasure from success. All scientific research will show you that the fear of losing capital is much greater than the pleasure of making profits."
Clever, funny and witty, “an expert in human psychology”, emotional nature - all these characteristics apply to Fink, a person, according to his friends, who is unusually interesting.
On East 54th Street there is an elite restaurant “San Pietro”, where on almost any day the largest New York financiers gather at the tables, who go there, as one of the corporate bosses put it, “to see people and show themselves off”, and at the same time and dine for a hundred dollars or more. Larry Fink is a regular at this restaurant and can often be seen casually chatting with another person at his regular table in "Director's Row", near the windows overlooking 54th Street.
- Larry has an amazing ability to make connections. Information flows into him from everywhere, which he then sifts and cross-checks, says his old friend Ken Wilson, a former senior Treasury official and partner at Goldman Sachs. At the same time, the useful information that the head of BlackRock has is by no means limited to financial markets.
On Wall Street, Fink developed a reputation as one of the most skilled rumor collectors. In an industry where information is everything, he is considered an unsurpassed master of obtaining this very information.
“Larry is a real gossip hunter,” says one of the major bankers who has known Fink since the early 80s. - He loves to hint meaningfully at his knowledge. “Ah, this is Bear Stearns, which has a portfolio of assets...” - here he, as if having come to his senses, falls silent.
Another favorite phrase of Fink is “I remember telling the guys from Washington that...”.
“Larry always wanted to be a significant figure,” the banker adds. “And now that he has become as significant as he could ever have dreamed of, he simply revels in it.”
During our six hours of conversations with Fink in December and January, all of his mentioned qualities were on full display. Seated at a long cherry-wood table in his conference room on the seventh floor of BlackRock's East 52nd Street headquarters, he talked about his firm, Wall Street, Washington and himself. At times he was dry, cold-blooded and reasonable, at times he was harsh, unrestrained and even rude. Gesturing ardently, he impatiently explained something, almost breaking into a scream, and after a moment he suddenly switched to a gentle whisper, as if he was talking to a child or his lover.
Insightful judgment and liveliness of thinking, coupled with expansiveness and loquaciousness - this is what makes Fink so charismatic. He seems open and simple-minded, but only for the time being. There is another Fink - cautious and inconspicuous, carefully controlling his every word.
One aspect of Fink, his friends say, craves recognition and “unlimited respect,” as one executive who has known him for thirty years put it. It is this hypostasis of him that loves the bright spotlight so much, it is precisely this that is inherent in the swagger that sometimes comes through in his statements. And at the same time, Fink, his friend says, is “obsessed, to the point of paranoia,” with the desire to maintain control of the situation. Perhaps because the basis of his success and influence is the fear of losing this control.
Risky business
Larry Fink started working on Wall Street back in 1976, when he was 23 years old. He grew up in California, in one of the Los Angeles suburbs - Van Nuys, where his father ran a shoe store and his mother taught English. According to Fink himself, he was “an ordinary guy from Los Angeles” who appeared on Wall Street, “surprising the most respectable audience with his turquoise jewelry and long hair.”
Larry graduated from the University of California at Los Angeles with a degree in Political Science, married his high school sweetheart, and then continued his studies at the same university's business school, taking a course in Real Estate Finance. Leading investment banks flooded Fink with job offers, and he eventually chose First Boston, where he was assigned to work in bond trading (a sleepy kingdom at the time). Three years later, Fink was appointed to oversee operations with mortgage-backed securities, which few people had heard of at that time.
Over the next decade, Larry Fink truly became a Wall Street legend. Along with Levi Ranieri of Salomon Brothers, he was considered the founding father of the debt securitization market, which transformed the face of the world of finance. By 2008, it was this multitrillion-dollar market of mortgage, auto and retail loans—purchased from banks, sliced up, repackaged, and resold to thousands of investors—that had done much to bring the economy to its knees. However, initially, when this market had not yet gotten out of control, its appearance was perceived as a revolutionary innovation. Looking back, Fink states, “We succeeded in mitigating the housing problem in America.”
Recalling “how nice it was to fly to Washington to negotiate with Fannie Mae and Freddie Mac about the prospects for mortgages,” he says: “Even in those years when I was not yet thirty, I felt the enormity of our undertakings.”
However, although Fink is keen to emphasize his involvement in national affairs, his Wall Street colleagues remember something else about him. Yes, people liked him, but at the same time they considered him an arrogant boor.
“It was never enough for this guy,” says one of First Boston’s former partners. “He was eager to outdo everyone, almost bursting with his own ambitions.
Stolen from superinvestor.ru