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Why Some Firms Thrive While Others FailGovernance and Management Lessons from the Crisis$
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Thomas H. Stanton

Print publication date: 2012

Print ISBN-13: 9780199915996

Published to Oxford Scholarship Online: September 2012

DOI: 10.1093/acprof:oso/9780199915996.001.0001

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Company Organization, Business Models, and the Crisis

Company Organization, Business Models, and the Crisis

(p.120) 6 Company Organization, Business Models, and the Crisis
Why Some Firms Thrive While Others Fail

Thomas H. Stanton

Oxford University Press

Chapter 6 looks at effects of firms’ organization and business models on their behavior and vulnerabilities. Changes in law and advances in technology encouraged increasing consolidation of financial firms. Too many large complex financial institutions, besides being “too big to fail,” also became “too big to manage.” Firms such as Fannie Mae, Freddie Mac and large mortgage originators such as Countrywide built economies of scale but also vulnerabilities because of their inability or unwillingness to diversify before the crisis hit. As the former CEOs of Fannie Mae and Freddie Mac both told the Commission, the GSE can be hard if not impossible to manage, especially in a crisis.

Keywords:   too big to fail, financial consolidation, Freddie Mac, Countrywide, business models, Fannie Mae, diversification

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