It looks like the government is bailing us out. Wow! $400 millions. To put things in perspective, that is about 2000 times less than the recent bank bail-out in the USA. And I feel better about a university bail-out than a bank bail-out. But that’s just me.
My school is not going out of business
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Will they receive equity in the school that they can resell if you become highly profitable someday? And are there conditions against big parachute payments for the university president?
Seriously, I’m glad your university will continue as a going concern. $400M might not seem so large compared to the big numbers in the headlines, but that is still quite a sum.
Given that it is a state university, there was never any question that the government had to take up the bill, somehow.
The really puzzling thing is that a state university managed to put itself in the red so much. Clearly, some people did not do their jobs. But you see, nobody was fired over this mess…
And this might be the real problem with bank bail-outs. What if, in ten years, the partially government-owned banks go out of business again? What then? Because the incompetent folks who mismanaged private money will surely mismanaged government money the same way, given time.
Clearly, we need to have a hard look at incentives for managers. Growth at all costs is not an option. Managers should carefully document their choices. They should lay out the risks at every step.