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.