Most financial firms have suffered in recent years, but money manager BlackRock is thriving. The firm manages $1.3 trillion for hedge funds, governments, and other big clients, but it's also been tapped to help the Fed with foundering companies like AIG and Freddie Mac. Now, reports the Wall Street Journal, it may get Treasury's backing to buy toxic assets from banks. That has raised conflict-of-interest fears, since BlackRock can influence the prices of the assets it buys and sells.
Federal auditors say BlackRock, in its role as a government manager, could use federal subsidies to overpay for distressed assets, thereby pumping up the price of similar items on their own books. As the New York Times reports, Congress is also apprehensive about BlackRock's multiple roles. "The potential for a conflict of interest is great and it is just very difficult to police," said Sen. Charles Grassley.