[33672] in North American Network Operators' Group
Re: Too big to fail?
daemon@ATHENA.MIT.EDU (Steven M. Bellovin)
Thu Jan 18 21:53:32 2001
From: "Steven M. Bellovin" <smb@research.att.com>
To: Scott Brim <sbrim@cisco.com>
Cc: Sean Donelan <sean@donelan.com>, nanog@merit.edu
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Date: Thu, 18 Jan 2001 21:29:52 -0500
Message-Id: <20010119022953.1A07535C42@smb.research.att.com>
Errors-To: owner-nanog-outgoing@merit.edu
In message <20010118205105.A1059@localhost.co-nectschools.net>, Scott Brim writ
es:
>On Thu, Jan 18, 2001 at 04:31:58PM -0800, Sean Donelan wrote:
>>
>> Remember during the last deregulation cycle. When the Savings & Loan
>> and Bank industries were "deregulated" one open question was: are
>> there banks considered too big to fail. The problem with that doctrine
>> is it warps management's risk analysis. Instead of appropriate investments,
>> management makes excessively risky decisions in an attempt to achieve
>> short-term returns and maximize shareholder value.
>>
>> Is PG&E too big to fail?
>
>But what would that mean? All the infrastructure is there, the only
>issues are cash flow and regulation of prices. If PGE was diddling with
>its infrastructure, lending out towers to shady businesses and such,
>there might be a parallel :-).
During the 19th century, there were a number of railroad bankruptcies.
The courts ruled that since all of their assets were good for only one
thing -- a railroad -- the only choice was to keep the corporation
going.
The real change, per the article I cited, is who makes the hard
decisions.
--Steve Bellovin, http://www.research.att.com/~smb
