BlackRock Inc. became the focus of a Wednesday clash between Janet Yellen and Elizabeth Warren, with the Treasury Secretary suggesting she may not favor singling out the world’s biggest asset manager for tougher oversight.

Senator Warren demanded to know whether Yellen would direct the Financial Stability Oversight Council to consider designating BlackRock as a firm whose failure could threaten the financial system. In response, Yellen indicated that FSOC should focus on risky activities -- citing mutual funds that can face fire sales in a panic -- rather than individual companies.

“It’s important to look very carefully at the risk posed by the asset management industry, including BlackRock,” Yellen said in testimony before the Senate Banking Committee. “Rather than focus on designation of companies, I think it’s important to focus on an activity like that and to consider what the appropriate restrictions are.”

Unlike the largest U.S. banks, which are periodically burned by risky loans to consumers and businesses, BlackRock didn’t get a capital injection from the U.S. during the 2008 financial crisis.

“The past two administrations in the U.S., and numerous global regulators, have studied our industry for a decade and concluded that asset managers should be regulated differently from banks, with the primary focus being on the industry’s products and services,” BlackRock spokesman Aziz Nayan said in an emailed statement.

During the Trump administration, FSOC shifted away from attaching risk labels to specific companies and re-directed the council toward “activities-based” oversight. The decision was controversial, with Warren and other Democrats complaining that the panel had relinquished its most potent tool. A risk designation subjects firms to additional Federal Reserve scrutiny. FSOC has yet to use its activities-based authority to raise alarms about any industry practices.

“If a $9 trillion investment company failed, would that likely have a significant impact on our economy?” Warren asked Yellen. “How can you analyze what the risk is if you’re not actually doing the investigation through FSOC?”

Yellen, who leads the FSOC in her role at Treasury, said she still thinks it’s “appropriate to designate institutions whose failure would pose material risk to U.S. financial stability.” However, she said asset managers are very different than the big banks that are already overseen by the Fed and it’s “not obvious to me that designation is the correct tool.”

Yellen said she’s begun working on FSOC issues, and that “asset management will be on the list” of areas the council studies.

With assistance from Annie Massa.

This article was provided by Bloomberg News.