Financial Intermediary Capitalism and the Accidental Oligopoly
Asset management firms’ accumulation of ownership shares has significant implications on the distribution of economic power
Last week I testified before the Senate Committee on the Budget on the invitation of Senator Bernie Sanders. The hearing was also about private equity, but I focused on concentration among large asset management firms—in particular, the economic power accrued by BlackRock, Vanguard, and (to a lesser extent) State Street because of their dominance in U. S. equity index funds. My written statement follows here.
Executive Summary
In recent decades, a few asset management firms have accumulated major ownership shares of virtually every large corporation in the economy. This development has had significant implications for the distribution of economic power in the United States.
Economic power is the power of individuals or organizations to determine how our economy functions. Today, economic power is concentrated in three types of entities: individual technology behemoths such as Amazon and Facebook; large private equity firms, which individually own more than two hundred companies; and giant asset management firms such as BlackRock, Vanguard, and State…
