(Fortune Magazine) -- At 11 o'clock in the evening on Saturday, Sept. 13, Larry Fink was about to board a flight from New York to Singapore. The following Monday he was scheduled to meet with the managers of several Asian sovereign-wealth funds. For the head of BlackRock, one of the world's largest asset managers, this trip was a huge opportunity that could mean billions of dollars in new business.
Still, he knew that the next 19 hours would be a bad time to be unreachable. Just a few miles west of the airport, bankers and government officials were huddled in the offices of the New York Federal Reserve Bank to hash out the fates of three of the biggest financial institutions on Wall Street - namely, Lehman Brothers, AIG, and Merrill Lynch. Two of the troubled firms - Lehman Brothers and AIG - were BlackRock (BLK, Fortune 500) clients; Merrill Lynch was BlackRock's biggest shareholder.
Fink made one final call before boarding. "Can I get on this plane?" he asked a colleague inside the meetings at the New York Fed.
"You can go," came the response.
At that moment Fink thought Barclays (BCS) had agreed to buy Lehman. So he boarded. As Fink took off, he could see through his window the lights of lower Manhattan. He did not know it then, but it would be the last time he would see Wall Street - at least the one he recognized - in one piece.
When Fink landed in Singapore at 5 a.m. on Monday morning, he checked his BlackBerry and scanned the headlines: Lehman bankrupt, Merrill Lynch bought by Bank of America, AIG collapsing. "I felt like Charlton Heston landing on the Planet of the Apes," says Fink. "My world had transformed."
In that moment, Fink knew as well as anyone how treacherous the capital markets had become. As chairman and CEO of BlackRock, he had seen the hidden liabilities of just about every financial institution that would be pulled into this whirling vortex of doom.
AIG, Lehman Brothers, Fannie Mae, and Freddie Mac had all hired BlackRock over the past few months. As Fortune went to press, Treasury Secretary Hank Paulson had BlackRock on his short list to manage, well, your money - a chunk of the $700 billion bank bailout known as the Troubled Asset Relief Program, or TARP.
If Paulson and Federal Reserve chairman Ben Bernanke have been the public faces of the financial crisis, Fink has been its behind-the-scenes fixer and father confessor. The reason so many CEOs have kept him on speed dial in recent months is simple: No other firm is trusted to pick through the exotic securities infecting banks' balance sheets and place an accurate value on them.
At a time when the credit-rating agencies like Moody's and Standard & Poor's have lost face, BlackRock's valuations have become a kind of de facto Good Housekeeping seal of approval that buyers and sellers of distressed assets trust.
"I think of it like Ghostbusters: When you have a problem, who you gonna call? BlackRock!" says Terrence Keely, a managing director at UBS, who worked with BlackRock last spring to dispose of a troubled $20 billion portfolio of mortgage-backed securities (BlackRock unloaded it for $15 billion).
But before anyone organizes a ticker-tape parade for Fink, keep in mind that 25 years ago he was an early and vigorous promoter of the CMO (collateralized mortgage obligation). Today the CMO and other asset-backed securities have become the monsters responsible for the credit crisis.
BlackRock itself has not been unscathed: Its money market funds saw $50 billion withdrawn in the month of September. In the third quarter, assets in its fund-management business lost more than $100 billion, dropping from $1.4 trillion to $1.26 trillion. Its stock, trading at $113 on Oct. 23, is down 40% for the year.
"The market declines are so severe, BlackRock is not immune," says Fink, 55. "I've been in this business for 32 years, and in a 20-week period - from Bear Stearns's collapse until now - the landscape has changed so dramatically. It's very unsettling. Very disorienting."
So the question is, Can Fink stop this monster - and make a profit along the way?Read more