Hi aktony,
Re: Is this a similar situation?
The similarity is that ENE and Chrysler both face or faced bankruptcy. I believe it pretty much ends there. ENE has about 20,000 employees, and in receivership, the bulk of them would have to continue their functions in the operating portions of the company. This could easily be accommodated in a Chapter 11 re-organization. The trading function is, in spite of trader's protestations to the contrary, largely just a speculative casino that can easily disappear without catastrophic results, like portions of the upper Midwest going without gas. FERC simply could not allow such a radical development. Emergency powers would come into play.
In the case of Chrysler, there was a real possibility that many tens of thousands of workers (I've forgotten the exact figure) would be thrown out of a job, and major banking committments would not be honored. This isn't the case with ENE.
As far as a FRB bailout to save ENE, don't hold your breath. The FRB might be inclined to organize a dismemberment of ENE, much like it did in the case of LTCM. Remember, the FRB is there to keep the banking system sound. So if Chase or Goldman-Sachs get into serious trouble as lenders and counterparties to ENE, then the FRB will bail out Chase or Goldman. Not ENE. It's toast, near as I can tell.
JM2C, Ray |
