Regulators Will Excuse Venture Firms From Rules, Patricof Says (opens in new tab)

(bloomberg.com)

12 pointsksvs16y ago5 comments

5 comments

Bernanke said it very well at last weeks' House Fin'l Svc's Cmt'e hearing - it shouldn't matter how company is structured or what industry it is considered to be a part of, it matters how big and interconnected firm is.

What if some VC/PE company becomes "too big to fail"?

Who would have have thought that GE and GM will become financial services companies at some point?

anamax16y ago

Hmm. How about we shut down organizations that are "too big to fail"?

After all, regulators world-wide have pretty much demonstrated that they're incapable of stopping such failures. The regulated companies had worse failures and were more likely to fail.

Of course, we should start with govt agencies and affiliates (I'm looking at you Fed) s that are too big to fail....

borism16y ago

I kind of agree... but how would you do it in a controlled way is absolutely incomprehensible question...

joshu16y ago

Well, the problem of "too big to fail" arises due to counterparty interdependancy due to leverage, clearing, domino collapse, etc.

VC firms end up not financially interacting with other companies in this manner, nor do they get large enough to be "big."

jakarta16y ago

Since VCs usually take equity stakes or convertibles, it's pretty doubtful that they'd be able to pose a systemic risk. Usually you end up seeing systemic risks when there's multiple tiers of non-convertible debt.

j / k navigate · click thread line to collapse

5 comments

borism16y ago

What if some VC/PE company becomes "too big to fail"?

Who would have have thought that GE and GM will become financial services companies at some point?

anamax16y ago

Hmm. How about we shut down organizations that are "too big to fail"?

After all, regulators world-wide have pretty much demonstrated that they're incapable of stopping such failures. The regulated companies had worse failures and were more likely to fail.

Of course, we should start with govt agencies and affiliates (I'm looking at you Fed) s that are too big to fail....

borism16y ago

I kind of agree... but how would you do it in a controlled way is absolutely incomprehensible question...

joshu16y ago

Well, the problem of "too big to fail" arises due to counterparty interdependancy due to leverage, clearing, domino collapse, etc.

VC firms end up not financially interacting with other companies in this manner, nor do they get large enough to be "big."

jakarta16y ago

j / k navigate · click thread line to collapse