BlackRock CEO Larry Fink was a featured speaker at the SIFMA Annual Meeting Tuesday in Manhattan. During his appearance, Fink shared numerous nuggets of wisdom with the audience, including these 10 key takeaways:
- If it wasn’t for Washington, the U.S. economy would be stronger and there would be more foreign investment in the U.S. “Our economy is based on principles … one of those principles is strong government. The dysfunction of Washington has created uncertainty that is playing out in the job market and capital expenditures.”
- On how history will view the Dodd-Frank Act: “Looking back at Sarbanes-Oxley, boy did we yell about that.” Sarbox slowed IPOs and foreign investment, but only for a short period of time. “We create a law. … We all adapt. … Everything with Dodd-Frank will work itself out. Does Dodd-Frank make society safer? Yes. … We’re better off.”
- Fed tapering – “I would begin tapering in December, but also make clear that rates will stay at or near 0% until 2016.”
- The growth countries of the future won’t be those with cheap labor. They will be the ones with the best energy systems and most efficient transportation infrastructure.
- Health care represents 18% of the economy. How the Affordable Care Act plays out will undoubtedly have a major impact on the economic future of the U.S.
- On entitlement reform: If you are living until you are 90, why would you want to retire at 62? You still have so many years of productivity left. We say 50 is the new 40 and 60 is the new 50, but we don’t adjust our retirement entitlements accordingly.
- On the troubling future of retirement savings: Retirement savings is going to be the biggest crisis in America – much bigger than health care. We are going to see a growing level of retirees living in poverty. Advice for those approaching retirement… “You better be nice to your kids because you’re going to be living with them.”
- Unwind Fannie Mae and Freddie Mac?: “We need to ask ourselves if housing is a priority for this country,” Fink said. Despite all the talk of unwinding, the mortgage market is more reliant on Fannie and Freddie now than it was before the crisis. Everyone should remember that the economy is where it is because housing has stabilized. Is there a role for a more involved private sector in housing finance? Yes. The market will evolve to where the private sector shifts mortgages to 10- and 15-year loans.
- The evolution of the role of the CEO is contributing to economic stagnation. Nowadays, many CEOs hold the top post for just 4 or 5 years. With that in mind, CEOs who are uncertain about the economy and their own job security often hesitate to make investments that may take 5 or 10 years to pay off. It is far easier for such CEOs to reward shareholders by doing dividend increases.
- The effect of robotics and technology on the job market can’t be underestimated. Travels to Asia and Mexico have shown Fink that the level of skill required to perform factory work is increasing.