BlackRock CEO Larry Fink. (Photo: Bloomberg)
BlackRock Inc. Chief Executive Officer Larry Fink had a stark message for a private audience: As bad as things have been for corporate America in recent weeks, they're likely to get worse.
Mass bankruptcies, empty planes, cautious consumers and an increase in the corporate tax rate to as high as 29% were part of a vision Fink sketched out on a call this week. The message from the leader of the world's biggest asset manager contrasts with the ebullient tones of a stock market that has snapped back from recent lows.
Even among Wall Street luminaries, Fink speaks with particular clout. He has been advising President Donald Trump on how to navigate the effects of the coronavirus pandemic. And BlackRock is playing a key role in the Federal Reserve's efforts to stabilize markets, helping the central bank buy billions of dollars in assets.
Fink said on the call with clients of a wealth advisory firm that bankers have told him they expect a cascade of bankruptcies to hit the American economy, and he wondered if the Fed needed to do more to provide support, according to a person with knowledge of the remarks.
A BlackRock spokesman declined to comment.
Even as the U.S. is plunged into deepening economic gloom, it will have to raise taxes to pay for emergency efforts to rescue sectors grappling with a difficult recovery, he warned on the call.
Among his predictions: lifting the 21% corporate rate signed into law as part of 2017's tax overhaul to about 28% or 29% next year, according to the person. Fink also said he sees tax rates for individuals going up.
Raising taxes would water down the biggest legislative achievement of Trump's time in office, when he and a Republican-controlled Congress drove through the most significant changes to the tax code in decades.
