After reading the AIG case and presenting on it last week, I have a hard time understanding how companies can keep at it the way they are these days with the mindset that they will never have any problems or ever be caught by the authorities. Companies and company executives may not think exactly like this, but I feel like businesses these days think that a failure won’t happen to them or if it did, they would be easily bailed out by the government like a lot of other companies when the recession occurred. I have a hard time understanding how companies can not learn from their own past mistakes or from other companies past mistakes.
AIG and Enron are two great cases for others to take something away from. They both made many mistakes that cost them in the long-run and other companies should be able to learn from these to prevent themselves from having the same outcome as AIG and Enron. Part of being a company or business today should mean learning from the past mistakes from others in order to better your own business or company as a whole. Maybe money is too big of a factor in today’s world and that might be the one downfall of the “too big to fail” companies these days.
If they are “too big to fail,” then do they think of smaller companies as too small to succeed? Describing a company as “too big to fail” can have many consequences on smaller business, or there may be benefits too. When AIG failed, were there smaller companies that were able to step up and take their place in the industry? Or was AIG irreplaceable and that’s another reason that it was bailed out? Can the government really make these assumptions or reason their bailouts with things like “too big to fail” or systemic risk? I believe the government has a large job and many responsibilites, but I am not sure if they should have the ability to bailout multiple companies in a time of recession and little money throughout the country.