Dec 30 (Reuters) - The U.S. Federal Deposit Insurance

Corporation has told asset manager BlackRock ( BLK ) it has

until Jan. 10 to accept an agreement that would allow the agency

to step up scrutiny of its investments in FDIC-regulated banking

institutions, according to a person familiar with the matter.

On Friday, the FDIC said it

reached a similar deal

with Vanguard strengthening the rules the asset manager

must observe as a passive investor in FDIC-supervised banks, the

latest step in a

months-long tug-of-war

between the banking regulator and the two biggest managers

of index-based mutual funds and exchange-traded funds.

The FDIC is pushing both firms to adopt "passivity

agreements," which provide the regulator with more tools to

monitor compliance on the part of the asset managers with

pledges not to influence the business decisions of the

FDIC-regulated banks in which they invest.

The individual familiar with the state of the negotiations

between BlackRock ( BLK ) and the FDIC said the firm received the

regulator's latest proposal on Friday, less than an hour after

the announcement of the Vanguard agreement. That source said the

wording of the proposed agreement is "substantively the same" as

that of the Vanguard pact.

The FDIC declined to comment on the Vanguard agreement

or the negotiations with BlackRock ( BLK ).

"We know that chief executive officers and board members of

large companies carefully watch the policy pronouncements of

these mega-owners," said Rohit Chopra, director of the Consumer

Financial Protection Bureau and a member of the FDIC board, in a

statement released on Monday.

"If a large asset manager is truly passive as it claims, it

should have no problem complying" with the kind of passivity

agreement the FDIC is seeking, Chopra said.

In a public comment letter submitted to the FDIC in October,

BlackRock ( BLK ) said it already makes legally binding commitments to

the Federal Reserve Board to remain a passive investor in U.S.

banks.

"BlackRock ( BLK ) does not exercise control over FDIC-supervised

institutions, nor does it seek to," Benjamin Tecmire, head of

regulatory affairs, said in the letter.

The FDIC has not stated what consequences might follow if

BlackRock ( BLK ) does not meet the Jan. 10 deadline.