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John Coates with The Problem of Twelve: When a Few Financial Institutions Control Everything
July 25, 2023
John Coates is the John F. Cogan Professor of Law and Economics and Deputy Dean for Finance and Strategic Initiatives at Harvard Law School. He has served as General Counsel and Acting Director of the Division of Corporation Finance of the Securities and Exchange Commission; before joining Harvard, he was a partner at Wachtell, Lipton, Rosen & Katz, specializing in financial institutions and M&A. He has testified before Congress and provided consulting services to the Department of Justice, the Department of Treasury, and the New York Stock Exchange. He lives in Newton, MA.
About The Problem of Twelve
A “problem of twelve” arises when a small number of institutions acquire the means to exert outsized influence over the politics and economy of a nation.
The Big Four index funds of Vanguard, State Street, Fidelity, and BlackRock control more than twenty percent of the votes of S&P 500 companies—a concentration of power that’s unprecedented in America. Then there’s the rise of private equity funds such as the Big Four of Apollo, Blackstone, Carlyle and KKR, which has amassed $2.7 trillion of assets, and are eroding the legitimacy and accountability of American capitalism, not by controlling public companies, but by taking them over entirely, and removing them from public discourse and public scrutiny.
What can be done to check this level of power? Harvard law professor John Coates argues that only politics can fight the problem of twelve.