The fact that BB&T didn’t dive head-first into the shallow pool of subprime mortgages certainly goes a long way toward explaining the relative health of BB&T as an institution. But how was BB&T able to resist chasing after all that new mortgage money?Apparently Allison became interested in Rand in the 1960's through his interest in economics and then onto finance, he saw the banking system as central to a capitalist economy. Part of BB&T's philosophy of the bank is that all employees are required to read "Atlas Shrugged". He goes on to say
The answer is simple: Subprime mortgages were bad for the people who took them out. That went against BB&T’s philosophy — not for reasons of altruism but because it would have been poor strategy. “We’re obviously a for-profit company, but we don’t think that it’s good business in the long term to do bad things to your clients, even if you make a profit doing it,” Allison said. “So we chose not to do negative-amortization mortgages because we knew it was going to get a lot of people in financial trouble.”
Allison calls it “the best defense of capitalism ever written” and made it required reading at BB&T. Since 2005 the BB&T charitable foundation has given millions of dollars to dozens of universities to establish academic programs devoted to Rand’s philosophy.
Allison points out that she is misunderstood more often than not. Rand is often viewed as “extreme” because her defenses of capitalism and “rational self-interest” are seen as promoting greed and selfishness. Yet Allison is quick to note that the strong values and ethics that Rand’s philosophy promotes allowed BB&T to steer clear of shortsighted and greed-driven decisions.
“A lot of people miss the fact that Rand has a very strong ethical system,” he observes. “Rand says you can derive ethics from reality. If anything, Rand is more rigorous in her ethical system than most codes are. If you’re dishonest, you are disconnected from reality, and that has consequences.”
Allison has no problem identifying whose economic philosophy was flawed. “I think that government policy is the primary cause” of the financial crisis, he says. “Government policy set up the problems we have in the real-estate market, and it is the Big Kahuna in the room.”
In particular, he relates the following anecdote about Rep. Barney Frank, chairman of the House Financial Services Committee, who had portrayed a lack of housing as the source of all evil: “I had an interesting conversation with Barney Frank — he’s the bad guy in my opinion because he’s a very smart guy. I said to Mr. Frank, ‘Housing’s a good thing, but if it’s so good as you describe without any kind of constraints, the next time someone commits a crime instead of putting them in jail, why don’t we give them a house?’”Needless to say I think capitalism needs to be defended and that reading Atlas Shrugged myself, it has opened my eyes more than once in the last few months. I would suggest anyone who hasn't read the book and have always wanted to, start reading it this weekend. It is never a bad time to read it, but with everything going on everyday with our economy and government it should be read, or re-read. If you think its irrelevant nowadays just check out all the conversation going on.