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Re: Too big to fail?
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.