BlackRock Says FDIC Plan Would Hurt Investors, Cost Banks (2)

BlackRock Inc. called on the Federal Deposit Insurance Corp. to promptly withdraw proposed restrictions on money managers’ stakes in lenders, contending the rule change would upend index funds, make it more costly for banks to raise capital and disrupt the economy.

The proposal presents “significant risks,” BlackRock said in a letter Thursday to the FDIC. The plan could lead to “negative consequences by creating regulatory and market uncertainty and discouraging investments in bank securities,” said the world’s largest asset manager, which oversees more than $7 trillion of exchange-traded and index funds.

BlackRock was responding to an FDIC proposal to apply ...