Collateral, credit crunch took down Constellation

There are 6 comments on the Baltimore Sun story from Sep 19, 2008, titled Collateral, credit crunch took down Constellation. In it, Baltimore Sun reports that:

Every one of Constellation Energy Group's 1.1 million electric utility customers can relate to the crisis that forced the company into a shotgun takeover yesterday.

Join the discussion below, or Read more at Baltimore Sun.

Jim

United States

#1 Sep 19, 2008
I say BULL CRAP to all of this. BGE was a sound well-run company with a customer friendly business model. It was the bungling Maryland politicians- Miller-Ehrlich-O'Malley-Busch- who messed the whole thing up. This month I received a BGE bill with "0" due. Of course, that would bankrupt any company. A public utility is a public utility, not a financial investment firm. If the politicians had held them to their task, appointed a PSC who understood their task and held them to it, none of this would have happened. As far as Shaddick(?), may he live in the dark the rest of his days.
Jack Klugman

Jessup, MD

#3 Sep 19, 2008
This story never asks the prime question, which is WHY? Why was Constellation so deeply into the finance business? Why did it have to borrow so much? Why was access to cheap credit its lifesblood? Working with borrowed cash is only a great business model until a downturn, when people start asking for repayment. Over-leveraging is the problem everywhere. Insolvency is the problem only in some cases. But the insovency in every case we've seen has derived from overleveraging. Reporters have to examine why this became the norm over the past 10-15 years.
Apartment Dweller

United States

#4 Sep 19, 2008
Poor, poor Constelation, cry us a river...

I'm not an Econimist, so maybe something could explain this to me. I pay my BGE bill in cash. So where does this money go? My bill went up twice since 2 years ago, are you saying they are still not making any profits? Why do they constantly need cash? Shouldn't the company set up some cash aside from their profits, perhaps instead of paying millions of dollars to the executives, who allowed such situation to happen?
Unregulated Monopoly

Washington, DC

#5 Sep 19, 2008
Jack Klugman wrote:
This story never asks the prime question, which is WHY? Why was Constellation so deeply into the finance business? Why did it have to borrow so much? Why was access to cheap credit its lifesblood? Working with borrowed cash is only a great business model until a downturn, when people start asking for repayment. Over-leveraging is the problem everywhere. Insolvency is the problem only in some cases. But the insovency in every case we've seen has derived from overleveraging. Reporters have to examine why this became the norm over the past 10-15 years.
Can you say "Enron"?
Unregulated Monopoly

Washington, DC

#6 Sep 19, 2008
Apartment Dweller wrote:
Poor, poor Constelation, cry us a river...
I'm not an Econimist, so maybe something could explain this to me. I pay my BGE bill in cash. So where does this money go? My bill went up twice since 2 years ago, are you saying they are still not making any profits? Why do they constantly need cash? Shouldn't the company set up some cash aside from their profits, perhaps instead of paying millions of dollars to the executives, who allowed such situation to happen?
It's called gambling. Wall Street is addicted to greed. They can't just make a healthy profit off of a sound business, they have to take a cash cow like BGE and milk it dry to feed their greed.

If you or I were to try these antics in Atlantic City we'd end up as an unconscious pile of broken bones in an alley behind a casino.
John

Rosedale, MD

#7 Sep 21, 2008
I've invested in BG&E for many years for college education and retirement, in the last 3 months the stock price fell by a factor of 4. I am dismayed that the CEO, who brought this havoc upon us with his risk management skills, can still walk away with a golden parachute of $47 million. I would like to know the next company he goes to run so I can invest in that one too.

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