The Brooklyn Rail

1.

In October 2022, my wife and I bought our first house. More precisely, my fully employed wife bought her first house and I was placed on the property deed. After running the debt-to-income numbers, our broker made it clear we were unlikely to get approved for a home loan with my name on it—despite my strong credit score, my student loan balance was too substantial. The roughly 1,600 dollars I was making each month as an adjunct instructor did not, as you might imagine, do much to offset this. Nevertheless, I had a modest amount of savings I’d squirreled away over the last decade of academic stipends and under-the-table gig work. Combined with the cash gifts from our recent wedding reception, it was enough for a down payment on an old house with a picturesque porch and a moldy, neglected cellar my wife wryly referred to as “the murder room.”

We took pictures that afternoon, standing in the front yard. Our front yard. And yet, as I looked at the white paint peeling from the aluminum siding on the west side of the house, it didn’t really feel as if it were “ours,” whatever this meant. For one thing, the entire process had felt like a test we didn’t know we were taking, and which had no discernibly correct answers. Marked by a series of bewildering and opaque legal procedures, it had culminated that morning with us gathering at a comically large table at the title office to initial an encyclopedia of documents with celebratory ballpoint pens, our realtor and broker there to observe it all from the dark corners of the room. Now, with very little money in our checking accounts and a set of labeled keys the previous owner had left for us, this assemblage of wood and glass in a rural Ohio town was suddenly ours to not accidentally burn to the ground. 

Added to this was the fact that my wife and I had long assumed this moment was impossible, an arcane ritual lost in the ash heap of history. Born in the 1980s, we are textbook millennials with textbook millennial biographies: over-educated, underemployed but “doing what we love,” stuck in a prolonged adolescence filled with ironic posturing and a deep anxiety about settling down. Without really trying, we’d become archetypes of a generation for which home ownership, among other things, remained highly improbable. After coming of age during the housing bubble of the 2000s, and then the fallout from the 2008 financial crisis, we’d learned to reframe our precarious existence as a kind of freedom. Since 2014, we’ve lived and worked in Chicago, moving from apartment to apartment and surviving off the declining discretionary budgets of humanities departments. Our biggest concern was trying to contact landlords on Craigslist before someone else snagged the two-bedroom apartment advertised as “quaint and vintage,” which is to say, small and poorly maintained. Every so often we’d fantasize about buying a house in the Chicagoland area, and the life that might come with being able to afford a 700,000 dollar home. We were far too broke for that to happen, obviously, but at least we didn’t have to pay up every time our shitty kitchen appliances needed to be replaced.

In fact, we were still broke, in many ways more than we’d ever been. We just happened to be living in a poorer part of the country. The fact that my wife had been offered a job at a university in rural Ohio, as opposed to Cleveland or Columbus, was the only reason we could afford the home in the first place. Our monthly payment was almost half of what we paid for our last apartment in Chicago, and for nearly twice the space.¹  

We walked inside the house and looked around the empty rooms. My wife pointed out things that would eventually need to be repaired, ideas for how we could arrange our furniture. One of the plaster walls in the living room had a crack running all the way across it, as if it were beginning to come apart. The tile floor in the kitchen had been made from asbestos and was a marbled maroon color that resembled raw meat. Peering into the murder room, we held our breath. Many years ago, it had probably been used to store produce during the long winter months. Now it was just a room we were afraid to enter.

2.

A month after the closing, before we’d even finished moving out of our rental, we received a notice in the mail. “Borrower Notification,” the one-page letter read, “Freddie Mac Has Purchased Your Mortgage Loan.” Unfamiliar with how often this happened, our first instinct was to assume the worst, to wonder if we’d been scammed somehow. But no action was required on our part, the letter assured us. Selling mortgage loans to Freddie Mac was merely a “standard part of the mortgage business for many of the nation’s mortgage lenders.” Our new servicer was Nationstar Mortgage LLC, which in 2017 had begun to operate under the name Mr. Cooper to divert attention from its poor financial reports. The name Mr. Cooper had been chosen to “personalize the mortgage experience.” It was all very personal indeed: from now on, we were to pay “Mr. Cooper” each month for a loan owned by “Freddie Mac.”  

Freddie Mac, of course, the familiar nickname of the Federal Home Loan Mortgage Corporation, had been instrumental in the mortgage crisis of 2008 through its practice of buying mortgages and bundling them as mortgage-backed securities to be sold on the secondary mortgage market. Despite the increased scrutiny, and attempts to reign in the sort of risky investment that precipitated widespread loan default, this practice still exists today. What this means is that while Freddie Mac may have purchased the loan from our original lender, the actual owner of this loan was not Freddie Mac. Most likely, our mortgage, bundled with the mortgages of other homeowners, had been purchased by an investor, or a group of investors who have entrusted their money to an asset management company.

Mr. Cooper, no doubt in response to questions from its millions of customers who suddenly discover their mortgage has been sold, explains it all quite clearly. “After a mortgage is created, it’s usually bundled up with other mortgages and sold as an investment,” reads a cheerful blog entry on the company’s website. “The process is a little complicated (okay, it’s very complicated), but in the end your mortgage ends up being owned by an investor. That means you are technically paying that investor back for the money you used to buy your house.”²

The word “technically” carries a lot of water here. Despite its attempts at transparency, it papers over the beating heart of finance capital and the rentier economy that controls nearly every facet of daily life: asset management companies. As Brett Christophers writes in The New Statesman, “asset managers collectively own global housing and infrastructure assets worth, at a minimum, 4trillion dollars…They own, and extract income from, things—schools, bridges, wind farms and homes—that are nothing less than foundational to our being.”³ The largest company, BlackRock, controls nearly 10 trillion dollars in assets globally. The next three—Vanguard Group, Fidelity Investments, and State Street Global Advisors—together control more than 15 trillion dollars in assets. The 25 trillion dollars assets under the supervision of these four companies is larger than the entire GDP of the United States, currently measured at 23.3 trillion dollars.

BlackRock’s largest holdings include Apple, Microsoft, Google, Meta, and Tesla. This is hardly surprising. But it also maintains anywhere from 5 percent to 20 percent ownership of dozens of pharmaceutical companies, as well as significant holdings in real estate (Berkshire Hathaway) and health care (Merck & Co., UnitedHealthcare Group). It owns 8 percent of Pepsi and 7 percent of Coca-Cola. It owns 7.6 percent of Home Depot. BlackRock, along with the handful of other massive asset companies, own some part of everything we touch in our ostensibly private and independent lives, including the resources on which our livelihoods depend. As Christophers notes, this far-reaching, tentacle-like influence is associated with a lower standard of living: “Being dependent on a real asset acquired by an asset manager – for shelter, energy supply, water or transportation – generally means higher costs and poorer-quality service, followed by considerable disruption when ownership changes hands just a few years later.” 

BlackRock, much like Freddie Mac, will insist that its investments help people by freeing up capital and lowering costs. As Larry Fink, BlackRock CEO, noted in a 2010 write-up in Vanity Fair, it was all very rewarding “going to Washington to talk with Fannie Mae and Freddie Mac about mortgage opportunities…even in my 20s, I felt there was an enormity to what we were doing to help.” ⁴ These “mortgage opportunities” were mortgage-backed securities, a financial instrument Fink helped revolutionize after the repeal of the Glass-Steagall Act in 1999, the same year BlackRock went public. BlackRock Solutions, BlackRock’s analytics and risk management system, was subsequently retained by the U.S. Treasury Department to handle the fallout from the 2008 mortgage crisis. This included the ledgers and toxic assets of the major players: Fannie Mae, Freddie Mac, AIG, and Bear Stearns. There was, as the article concluded, “little doubt among the financial establishment in Washington and on Wall Street that BlackRock was the best choice to handle the government’s problems.” 

On this point, nothing has changed. In March 2020, as the coronavirus pandemic shut down the country, the Federal Reserve announced it was hiring BlackRock Financial Markets Advisory to purchase a swath of commercial mortgage-backed securities on its behalf. “BlackRock,” the Fed said, “was selected on a short-term basis to serve as an investment manager after considering their expertise in trading and analyzing agency CMBS in the secondary market, and robust operational and technological capabilities.”⁵ Most of these securities, purchased with the hope of easing widespread economic concerns, were guaranteed by Fannie Mae and Freddie Mac. In 2021, BlackRock Managing Director Kevin G. Chavers retired and joined Freddie Mac’s board of directors.

3.

Behemoth asset management companies like BlackRock and Vanguard benefit greatly from their paradoxical obscurity. Everyone is familiar with the public-facing billionaires of major corporations: Bill Gates, Jeff Bezos, Elon Musk, Mark Zuckerberg. Their images are endlessly reproduced and scrutinized, and like the robber barons of old they have seeped into our collective consciousness as looming, omnipresent figures. The same can’t be said for the major players who own and control just about everything you can imagine, from the health care you can hardly afford to the salad dressing in your refrigerator door. Most people have probably never even heard of Larry Fink. There are no ironic memes featuring the President and CEO of Vanguard Group, Mortimer J. Buckley. These hardly even sound like real names.

Such obscurity is obviously beneficial, economically and politically. Some of the loudest voices criticizing asset managers come not from the left, but from the right, in particular objecting to ESG investing (supposedly promoting environmental, social, and corporate governance issues). This ostensibly “responsible” investing, such critics insist, has led to the rise of “woke capital” and the adoption of social justice causes by major corporations. The problem with asset management companies, in other words, is that they are less concerned with their return on investment than they are on making the “correct” investments (i.e. those which support progressive causes). The object of this critique is correct, but the analysis is wrong. It also happens to benefit asset managers by framing the “real” problem as one of beliefs, not exploitation. On the left, meanwhile, asset management rarely gets much attention at all. While the neo-feudal economy it creates is certainly part of the discourse, the truth of the matter is that it gets considerably less engagement than the more visible battles waged in the cultural wars, of which there remains no shortage. 

And yet, we all feel it (well, most of us). It’s as if it were a force of natural law, a kind of organizing principle of everyday life: everything sucks now. There is simply no easier way to articulate it. And as vague as this complaint is, I am certain you know exactly what I mean. You’ve felt it recently, a kind of nihilism that washes over you, or through you. It’s no wonder the simulation hypothesis has become such a compelling philosophical quandary. Over the last few decades, asset management and finance capital has transformed reality into a shittier, more tedious version of itself, and we all get to pay a monthly subscription to not really enjoy it. Thankfully, it all feels too convoluted, too wonky and abstract, to ever do anything about it.

“Economics are the method,” Margaret Thatcher declared in a 1981 interview with the Sunday Times. “The object is to change the heart and soul.” Two things seem especially striking about this statement, one of Thatcher’s most enduring slogans. The first is its materialist formulation, its logic an echo of the foundational claim of Marxian political economy: “It is not the consciousness of men that determines their existence but their social existence that determines their consciousness.” Thatcher, of course, couldn’t have been further from Marx in her commitments, but her method of using economics to “change the heart and soul” of a nation describes the very object of Marx’s critique. That’s the second striking thing: it worked, and it did so in ways that even the most rabid neoliberal couldn’t have imagined. The financial class succeeded by being more materialist than its opposition. 

It is difficult, admittedly, to not feel resigned. Thatcher’s other slogan, “There is no alternative,” feels especially true after the pandemic and its massive transfer of wealth. This can be visualized starkly by looking at a graph of property values, which will likely show a sudden rise in 2020. My wife and I noticed this frequently as we walked through houses around our rural town, and the towns nearby. “Too bad we weren’t looking to buy a house before the pandemic,” my wife said at one point. “All these places would be like 50,000 dollars cheaper.”

We found our house, eventually, and very slowly we made some repairs. We put photographs and artwork on the walls. When our neighbor randomly began mowing our yard with his riding lawn mower, Twisted Iced Tea in hand—a regular favor, we learned later, he had performed for the previous owner—I found myself peering out from the kitchen window, jokingly quoting Woody Harrelson’s masterfully performed line in True Detective: “I like mowing my lawn.” It had all begun to feel more like ours than it once did. 

Then, in November 2023, my wife and I discovered we were unable to make our scheduled mortgage payment to Mr. Cooper. For some reason, its website wasn’t working. A few days later, we learned that this suspension of services was the result of a hack that had exposed the names, addresses, phone numbers, Social Security numbers, dates of birth and bank account numbers of its 14.7 million customers, including ours. It’s unclear what was done with this information, and all we can really do is wait and see if someone attempts to use it. We are, as we were told, always able to purchase one of the many identity theft protection services available—like, say, LifeLock, which offers yearly plans for 90, 240, or 395 dollars.

According to the management consultant company Fintel, two of Mr. Cooper’s largest investors are BlackRock and Vanguard Group. Together, these two asset management companies own 27 percent of the company.⁶ BlackRock’s most recent investment, 11 million shares, came in January 2024, barely a month after the severity of the breach was publicly announced. That same day, BlackRock filed its purchase of 60 million shares in NortonLifeLock Inc, increasing its ownership stake to 9.4 percent. Only one company, Vanguard Group, owns more. 

1. Also helpful was the fact that we’d closed just prior to the decision by the Federal Reserve to raise interest rates in response to growing inflation, which would have pushed the house out of our budget.
2. https://www.mrcooper.com/blog/who-owns-your-mortgage/
   
3.  Brett Christophers. “Our new financial masters: How asset managers work in the shadows – and shape all of our lives.” The New Statesman. 27 April 2023.
   
4. Suzanna Andrews. “Larry Fink’s $12 Trillion Shadow.” Vanity Fair. April 2010.
   
5. “U.S. Fed hires BlackRock to help execute mortgage-backed securities purchases.” https://www.reuters.com/article/idUSKBN21B3DZ/
   
6. https://fintel.io/so/us/coop