Jacquelyn Martin/AP Photo
Brian Deese, right, speaks at a White House press briefing, March 19, 2015.
Back in 2016, BlackRock, the world’s largest asset manager, built what amounted to a shadow government, designed to help their CEO Larry Fink become Treasury secretary in a Hillary Clinton administration. Numerous former Obama administration officials decamped to BlackRock, giving Fink the connections and expertise he needed to work his way into the Clinton Cabinet.
That Cabinet never materialized, of course, and this time around, Janet Yellen has already been given the Treasury secretary nod, as our Robert Kuttner first reported. But BlackRock’s influence in a Biden administration has not gone away. The Prospect has learned that Brian Deese, a former Obama administration official who became managing director and global head of sustainable investing at BlackRock, is the leading candidate to run the National Economic Council (NEC), a critical coordinating position at the White House.
Deese, who appears on a hit list of corporate-friendly potential candidates disfavored by progressive activists, held several jobs in the Obama White House, including four years at the NEC as special assistant to the president for economic policy and deputy director. He also did a turn as deputy and acting director of the Office of Management and Budget, and a senior adviser to Obama on climate policy.
The last one was an interesting landing spot, because Deese had no policy experience with climate. During his tenure, Deese endorsed the significant rise in fossil fuel production under Obama, and defended continuing oil drilling in Alaska and fracking on public land, something even Biden has ruled out.
But it’s Deese’s work at BlackRock that has raised the most recent concern. Activists have spent years trying to get BlackRock to divest from fossil fuel companies and other climate polluters, and it was Deese’s job to counteract them. “At BlackRock, he has not demonstrated that he’s willing to push the envelope on bold climate action,” said Moira Birss, climate and finance director for Amazon Watch, a nonprofit that fights for rain forest protections and rights for Indigenous people. “In interactions I’ve had with him, he’s been really dismissive of contemplating the impacts of the policies that he’s been creating at BlackRock, the impact on real people and frontline communities.”
Deese controlled BlackRock’s environmental, social, and governance (ESG) investment strategy, an in-vogue designation that makes financiers feel good about their contributions to the world. In this position, Deese made mostly empty promises to environmentalists about BlackRock’s goals, which withered upon close inspection.
For example, in January BlackRock announced a major initiative to “put sustainability at the heart of its investment decisions,” including divestment from coal companies. In reality, the directive limited the divestment to companies that make more than 25 percent of their revenues from coal, leaving in place scores of investments. A British group called Urgewald that analyzes asset management companies for their climate risk estimates that BlackRock only excluded 20 percent of the 746 companies on its Global Coal Exit List, and the company still had $17 billion invested in coal producers.
BlackRock remains the world’s largest financial backer for fossil fuel projects, including new coal development as well as existing coal reserves. BlackRock also is heavily invested in agribusinesses that are destroying the Amazon rain forest. The company issued a statement on agribusiness in February, but it offered little in the way of solutions. The statement “fails to explain … what standards it will use to gauge companies’ operations, and what consequences there will be for companies that continue to drive widespread deforestation,” noted the coalition BlackRock’s Big Problem.
Deese has made excuses for BlackRock’s portfolio, claiming that the firm creates index funds that buy every firm on an exchange, and therefore cannot easily divest from climate-risking entities. “I find it very disingenuous,” said Birss. “BlackRock in some cases makes it own indices and designs its own funds … it makes decisions on what funds to put before clients.” Deese has also argued against divestiture from the fossil fuel industry.
When it came to voting on shareholder proposals that could transform energy and utility companies, BlackRock failed to raise a whisper. As a large investor, BlackRock could use its vote to force sustainability at these firms, but a report from Majority Action found that BlackRock supported 99 percent of all company-proposed board of director seats at these firms in 2020, and voted against 10 out of 12 shareholder proposals with an impact on climate.
The issues with BlackRock don’t stop with climate. As former Sherrod Brown aide Graham Steele argues in a paper out today, asset managers with trillions in investments under their control have become “the new money trusts,” able to wield tremendous influence over our economy and our lives. BlackRock has over a 5 percent stake in more than 97.5 percent of all S&P 500 companies, and it’s so dominant in trading that the Federal Reserve hired it to manage its corporate bond purchases (predictably, a disproportionate share of those purchases went to support BlackRock’s own investment funds). Common ownership could also limit competition and weaken corporate governance, and conflicts of interest are ripe, as BlackRock leases technology to financial firms it has also invested in.
Activists have spent years trying to get BlackRock to divest from fossil fuel companies and other climate polluters, and it was Deese’s job to counteract them.
“Considering BlackRock’s long and heinous history of reckless exploitation of and profiteering from Black and Indigenous communities, AND the fact that ESG is a part of Deese’s (failed) work portfolio, we absolutely stand against having someone like him at a position of power like NEC,” said Vasudha Desikan with the Action Center on Race and the Economy (ACRE), which has been trying to push the Biden administration toward economic personnel without corporate or financial ties.
The fact that Deese could take over the NEC is notable. The position was created for Robert Rubin in 1993 as a way to bring economic policy coordination inside the White House and weaken the power of the Council of Economic Advisers, a more independent body of economists. NEC directors have been key bottlenecks in past administrations, filtering what advice and information gets to the president. In 2009, NEC director Larry Summers made sure that President Obama was presented only with smaller options for stimulus, ruling out fiscal aid at the level necessary to fill the demand gap. Deese worked with Summers at NEC during Obama’s first term.
With Biden more of a manager than a fixed ideologue, what options he gets to see matters significantly. That’s why Deese’s history inside politics should be just as troubling as his work at BlackRock.
In addition to supporting fossil fuel extraction while a climate adviser to Obama, in 2008 as an advisor to Hillary Clinton’s presidential campaign, Deese endorsed deficit reduction and “fiscal discipline.” He said at his confirmation hearing for deputy director of the Office of Management and Budget in 2013 that his top priority would be working on a “comprehensive deficit reduction agreement,” which would include “entitlement reform.” In Washington-speak, that typically refers to Social Security and Medicare; in that hearing, he suggested means testing as a potential solution. After leaving the Obama administration, Deese gave paid speeches on topics that included “how the budget process can actually be used to reform entitlements and the tax code.”
Deese also was a key supporter of the Trans-Pacific Partnership, the multilateral trade agreement that was eventually rejected by House Democrats and tossed out by President Trump. With a potentially weak U.S. trade representative installed, trade policy would be largely run out of the White House, making the NEC director an even more critical figure.
Progressives have floated other names for NEC, including former Biden economic adviser Jared Bernstein, and progressive economist and Biden adviser Heather Boushey. But as Politico reported today, Obama veterans are skillfully muscling their way into key policy posts, pushing aside many who worked for Biden on the campaign. Deese was an informal adviser to the Biden campaign, but he comes out of that Obama world which has been winning the transition.
Government ties to BlackRock are common around the world. A report from 2018 found that BlackRock had hired at least 84 former government officials and policymakers worldwide in a 15-year stretch. Many of them rotate back into government to help protect BlackRock’s needs. Deese would follow in that tradition. And his views on deficit reduction and climate, at a time when the U.S. desperately needs to spend to prevent a double-dip recession and decarbonize to prevent planetary destruction, would go against Biden’s stated goals to “build back better.”
“The Biden administration can’t talk out of both sides of their mouth when it comes to fighting for economic justice,” said Vasudha Desikan of ACRE. “Are you serious about reorienting our economic policy and priorities to fight climate change and will you commit to having dedicated public servants who will end Wall Street profiteering from the planet and BIPOC communities? Or are you not?”
