There's been some rumbling in Washington about Too Big To Fail (TBTF) lately, mostly stemming from Elizabeth Warren's cross-examination of Ben Bernanke, and some new anti-TBTF bipartisan legislation presented on the floor of the Senate last week.
Consequently "The Daily Show" took a stab at the topic late last week in a segment on mergers and acquisitions.
The segment mostly crashed and burned.
It opens with a montage of clips from financial media about "Merger Mania" — the idea that Warren Buffett's Heinz deal, Michael Dell's announcement that he wants to take Dell private, Office Depot's merger with Office Max, the American Airlines merger with US Airways, and more, signal that the M&A market is back.
Stewart points out that in the 1980s M&A deals weren't always good for the economy.
"These mergers aren't good for the economy so why are these financial reporters...so excited about these mergers?" Stewart asked.
John Hodgeman dressed in 1980s style, Gordon Gekko getup, helps him out.
"Why would they put themselves in the position that by merging with other companies they become so big...too big... so big that they don't operate efficiently..." Stewart muses.
"Too big to fail," Hodgeman interrupts. "Too big to fail, it's like the rich man's YOLO."
It's a good line but it has nothing to do with some of the deals Stewart mentioned, our current M&A market, or the connection between corporate America and Wall Street banks.
The merger between American Airlines and US Airways has been discussed for a long time. Heinz was a value acquisition by two of the richest men on the planet — Jorge Lemann and Warren Buffett — who do deals regardless of the economic climate. Office Max and Office Depot are companies with the same struggling business model. Finally, Michael Dell has contemplated taking his company private for years.
These are separate deals that may not even signal the M&A market is back. That in itself is something up for debate.
There are many reasons why these companies are merging — dismal business models, low interest rates, what have you — but TBTF isn't one of them.
Watch the clip below (The Daily Show via Bing):
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