[33685] in North American Network Operators' Group
Re: Too big to fail?
daemon@ATHENA.MIT.EDU (Wayne Bouchard)
Fri Jan 19 15:23:50 2001
Date: Fri, 19 Jan 2001 13:21:25 -0700
From: Wayne Bouchard <web@typo.org>
To: Sean Donelan <sean@donelan.com>
Cc: smb@research.att.com, nanog@merit.edu
Message-ID: <20010119132125.B9331@typo.org>
Mime-Version: 1.0
Content-Type: text/plain; charset=us-ascii
Content-Disposition: inline
In-Reply-To: <20010119003158.9712.cpmta@c004.sfo.cp.net>; from sean@donelan.com on Thu, Jan 18, 2001 at 04:31:58PM -0800
Errors-To: owner-nanog-outgoing@merit.edu
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.
This is the whole reason behind the federal reserve. To provide a
kinda of safety net in case banks ran short on ready cash.
> Is PG&E too big to fail?
I think this is something that has to be considered. The state will
certainly not allow the customers of either PG&E or southern cal
edison to be without power for a long period of time. Too much public
safety depends on it. So if the companies fold, the state will have no
choice but to take control of the company.
