In
March, the New York Fed tapped asset management giant BlackRock
Inc to serve as investment manager for two new facilities to
purchase corporate bonds and exchange-traded bond funds among
efforts to sustain the economy amid the COVID-19 pandemic.
The move concerned Republican senators, who sent a letter to Fed
Chair Jerome Powell earlier this month expressing worries that
BlackRock and the Fed would avoid energy and transportation
companies because of the firm's new climate-focused investment
policies.
Led by Senator Kevin Cramer of North Dakota, they asked the Fed
to emphasize that would not be the case. They wrote that "to
avoid conflicts of interest, BlackRock must act without regard
to this or other investment policies BlackRock has adopted for
its own funds."
On Monday, a group of Democrats including Brian Schatz of Hawaii
sent its own letter to Powell, asking the Fed to release details
about the purchases and calling on the Fed to "accelerate its
efforts to better understand and price climate financial risks."
Fed officials did not immediately comment.
The dueling letters could put additional pressure on the Fed to
be more transparent about the investment guidelines it will use
as it works to keep credit flowing to businesses, or whether
climate will be a factor.
Powell said in January the Fed could play a part in keeping
climate change from destabilizing financial markets.
Energy companies have been shattered by the economic slowdown,
and U.S. crude oil futures collapsed below $0 on Monday for the
first time.
Climate issues were not primary a decade ago when the Fed also
tapped BlackRock's help during the last economic crisis. But
greenhouse gas emission and water pollution have since become a
major focus of financial leaders including BlackRock Chief
Executive Larry Fink, who vowed in January to take more account
of sustainability matters.
A BlackRock spokesman did not comment.
On its website, the New York Fed says the primary market
corporate credit facility will purchase bonds of eligible
issuers that were highly rated as of March 22.
The secondary market corporate credit facility will purchase
bonds and funds "whose investment objective is to provide broad
exposure" to the corporate bond market.
(Reporting by Ross Kerber in Boston and Jonnelle Marte in New
York; Editing by Peter Cooney)
[© 2020 Thomson Reuters. All rights
reserved.] Copyright 2020 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|