Skip to main content

BB&T prefer liberty & reason to bailouts

Found a very interesting article yesterday from The New York Times on North Carolina-based bank, BB&T. It centers on the company's moral underpinnings and a business philosophy that has helped BB&T avoid much of the fallout of the current economic crisis.

It turns out that the bank's chairman, John A. Allison IV, is a devoted Ayn Rand student and a vocal critic of the government's interventions in the economy. He also feels that the current financial crisis, often pilloried as the result of excesses wrought by an era of free-market madness, was largely brought about by the government itself, through the monetary interventions of the Fed and government regulations that supported irresponsible lending by the GSEs.

Here are excerpts from, "Give BB&T liberty, but not a bailout":

"OVER much of the last four decades, John A. Allison IV built BB&T from a local bank in North Carolina into a regional powerhouse that has weathered the economic crisis far better than many of its troubled rivals — largely by avoiding financial gimmickry. And in his spare time, Mr. Allison travels the country making speeches about his bank’s distinctive philosophy...

...Mr. Allison, who remains BB&T’s chairman after retiring as chief executive in December, has emerged as perhaps the most vocal proponent of Ms. Rand’s ideas and of the dangers of government meddling in the markets. For a dedicated Randian like him, the government’s headlong rush to try to rescue and fix the economy is a horrifying realization of his worst fears..."

While your humble editor is not exactly a learned Ayn Rand disciple (still haven't read Atlas Shrugged), I'm sure many of us have heard the accusations that Rand's philosophy of individualism somehow promotes a sociopathic disregard for society as a whole.

With that in mind, here's an excellent example from this article of how BB&T have followed through on their philosophy to protect their firm and our society by working to uphold property rights and keep borrowers (the bank's customers) out of financial danger.

"Mr. Allison cites two examples in which the bank’s philosophy guided its real-world decisions.

After the Supreme Court upheld the right of local governments in 2005 to condemn private property and hand it to someone else for commercial development, he says, BB&T refused to make loans to developers who obtained property that way.

He also says BB&T decided not to offer the controversial “pick a payment” mortgages that got so many of its competitors into trouble. Such loans, also known as “option A.R.M.’s” or “negative amortization loans,” allow borrowers to make payments that don’t even cover the interest on the loans, which causes the amount they owe to grow.

“While we did not foresee the decline in the real estate market, we knew home prices would not continue to appreciate at 15 percent per year forever,” he says, adding that his bank knew that pick-a-payment loans would be trouble for many homeowners.

“We believe Rand’s concept of the ‘trader principle,’ where life is about trading value for value, where both parties benefit from the transaction,” he says."

Yes, morality is inherent to true capitalism. Go read the whole thing.

Related articles and posts:

1. Atlas Shrugged: from fiction to fact? - Finance Trends.

2. Thomas E. Woods interview: Meltdown - Finance Trends.

Popular posts from this blog

The Dot-Com Bubble in 1 Chart: InfoSpace

With all the recent talk of a new bubble in the making, thanks in part to the Yellen Fed's continued easy money stance, I thought it'd be instructive to revisit our previous stock market bubble - in one quick chart.

So here's what a real stock market bubble looks like. 

Here's what a bubble *really* looks like. InfoSpace in 1999-2001. $QQQ$BCORpic.twitter.com/xjsMk433H7
— David Shvartsman (@FinanceTrends) February 24, 2015
For those of you who are a little too young to recall it, this is a chart of InfoSpace at the height of the Nasdaq dot-com bubble in 1999-2001. This fallen angel soared to fantastic heights only to plummet back down to earth as the bubble, and InfoSpace's shady business plan, turned to rubble.

As detailed in our post, "Round trip stocks: Momentum booms and busts", InfoSpace rocketed from under $100 a share to over $1,300 a share in less than six months. 

In a pattern common to many parabolic shooting stars, the stock soon peaked and began a…

William O'Neil Interview: How to Buy Winning Stocks

Investor's Business Daily founder and veteran stock trader, William O'Neil shared his trading methods and insights on buying winning stocks in an in-depth IBD radio interview.

Here are some highlights from William O'Neil's interview withIBD:

William O'Neil's interest in the stock market began when he started working as a young adult. 

"I say many times that I didn't get that much out of college. I didn't have much interest in the stock market until I graduated from college. When I got married, I had to look out into the future and get more serious. The investment world had some appeal and that's when I started studying it. I became a stock broker after I got out of the Air Force."
He moved to Los Angeles and started work in a stock broker's office with twenty other guys. When their phone leads from ads didn't pan out, O'Neil would take the leads and drive down to visit the prospective customers in person.

"I'd get in the c…

New! Finance Trends now at FinanceTrendsLetter.com

Update for our readers: Finance Trends has a new URL! 

Please bookmark our new web address at Financetrendsletter.com

Readers sticking with RSS updates should point your feed readers to our new Finance Trends feedburner.  



Thank you to all of our loyal readers who have been with us since the early days. Exciting stuff to come in the weeks ahead!

As a quick reminder, you can subscribe to our free email list to receive the Finance Trends Newsletter. You'll receive email updates about once every 4-8 weeks (about 2-3 times per quarter). 

Stay up to date with our real-time insights and updates on Twitter.