Tuesday, November 04, 2008

BB&T to participate in U.S. Treasury program

As you may have already heard, BB&T, led by long-time Objectivist John Allison, has elected to participate in the Treasury Department's capital purchase program [Press release here]. I for one am disappointed by Mr. Allison's stand for the following reason. To my knowledge, no one forced Mr. Allison to say this:

"We support the Treasury's efforts to stabilize the credit markets and restore confidence in the financial system," said BB&T Chairman and CEO John A. Allison.
Mr. Allison may have had no choice when it came to accepting government control over his bank. He may have had his reasons as we all do when faced with a mixed economy. Nevertheless, Mr. Allison was under no obligation to publicly praise the government for its latest encroachment.

There is a concept in Objectivism that describes such conduct. It is called the sanction of the victim. With all due respect to Mr. Allison for his support for Objectivism, he just did so via press release.


Anonymous said...

BB&T's statement is consistent with points 5 and 6 of its statement regarding the bailout, where it endorsed significant aspects of the bailout and even a new one (point 6) that would significantly expand the bailout. Point 6 calls for government to purchase "lots and houses under construction."


"5. A significant and immediate tax credit for purchasing homes would be a far less expensive and more effective cure for the mortgage market and financial system than the proposed “rescue” plan.

6. This is a housing value crisis. It does not make economic sense to purchase credit card loans, automobile loans, etc. The government should directly purchase housing assets, not real estate bonds. This would include lots and houses under construction. "

Anonymous said...

I can't see any legitimate reason for Allison to lend his public support to the bailout--that is, not if he is an Objectivist. He could have remained silent, but obviously he elected otherwise.

The parallel in my life is student loans; when I was a student, I had little choice but to take the money but I was (and continue to be) clear in my opposition. I agree with Mr. Provenzo. Allison just committed sanction of the victim via press release.

Burgess Laughlin said...

If I were investigating this, I would like to know items such as:

- Does BB&T have a board of directors?

- Did the BoD write the press release?

- Does the board tell the board chairman or CEO what to say in a press release, a release he is bound by contract to read to the press?

I don't know the answers.

Thaissa said...

The Treasury and Federal Reserve should restore confidence in the US financial system. They created it. Restore confidence and then get the hell out of the way. I don't think it is rational to advocate an immediate one day withdraw, in the same way it isn't rational to advocate an immediate end to Social Security.

Poor Eliot said...

Oops, Nick. I left the above comment using my wife's name. Oh well.

Anonymous said...

John Allison deserves every benefit of the doubt, not criticism without facts or full understanding.

Anonymous said...

I have to agree that I am perplexed by Allison's capitulation. He does have a responsibility to his shareholders to behave in a way that protects the value of the company, but that doesn't mean he should surrender without even a whimper. I would have expected at least some public statement of angst.


Steve Rodgers said...

John Allison deserves the benefit of the doubt? He has clearly decided that he must support the state's takeover of his firm--in fact, he has explicitly praised the takeover (or allowed his good name to be used by others to praise it). He may have his reasons, but I am under no obligation to share them or laude him for it.

While BB&T has done many good and valuable things to help promote capitalism, John Allison's undeserved sanction of the government's takeover is not one of them.

Anonymous said...

One of my first writing jobs was with Barron’s Magazine in New York City, and for a time with the Wall Street Journal. I attended corporate press conferences, but my principal job was to sift through corporate press releases and write up digests of them for the paper. It was on that job that I learned how to “read between the lines,” and distinguish between truth and blather.

I have just finished reading the BB&T press release, and I cannot help but suspect government extortion. Frankly, my stomach turned when I read Nick’s report of this development, and then shook my head when I read the press release.

First, BB&T was not one of the banks called into Henry Paulson’s office and presented with his ultimatum. So, that leaves only three scenarios left to speculate on.

One, that BB&T was visited by Treasury people and in a friendly way more or less told, “Look, you’re the 14th largest private financial institution in this country, and it would be great for national morale if you volunteered to participate in our efforts to restore confidence and credit in our economy. Just let us know what you think. Here’s our card.”

Two, BB&T was visited by Treasury people and told the same thing, but with the promise that if the bank did not “voluntarily” participate in the “national effort,” things could be made nasty for the bank.

Third, John Allison caved in either scenario.

But, to read the press release, one would think that he suddenly got religion and rushed up to Washington D.C. to “volunteer” his bank’s services. And we shall never know what behind the scenes arm twisting, threats and other threats of force were employed to persuade BB&T to capitulate.

If BB&T wanted to issue a press release, it should have said, more or less, “Treasury goons appeared without appointment in our offices and threatened this bank with ruin if we did not sign the Gift Certificate. We will not sign it, come what may. This press release is being sent to all major newspapers and news media outlets. This bank considers the action on the part of our government as Barack Obama’s first act as president, and he has not even been sworn into office.”

This country is cooked. And I wonder what ARI has to say about this defection.

Ed Cline

Anonymous said...

I don't think John Allison "caved." It is akin to the "gun to one's head scenario." He probably had no choice.

Anonymous said...

Forget my last remark in the psuedo press release about Obama. It wouldn't have mattered who won the election. And, anonymous remarked:

" don't think John Allison "caved." It is akin to the "gun to one's head scenario." He probably had no choice."

Well, yes, he did have a choice. Say no, and say it out loud, in a press release, or a news conference, or the like. Do you really think the government could withstand that kind of knowledge being released to the public? Maybe it could survive the scandal, but it would be a start of fighting back. Or are we all suposed to live in a purgatory of doubt and uncertainty about who's next?

Where do we draw the line? Our forefathers drew it at Lexingotn and Concord and Bunker Hill.

Ed Cline

Anonymous said...

By his actions, John Allison has signaled that one of the most accomplished Objectivists thinks that caving into statistism is the best path. I could take Obama's victory last night. I'm not sure I can take this.

bruce V. Bracken said...

It's hard to find anymore business leaders who haven't been corrupted by the government. Are they all whores?

Jim said...

The offending sentence reads 'We', not 'I'. As a statement of fact, 'We' as the management and board of the company can support, without 'I' being Mr. Allison doing so.

Would I have made his statement? No. When Sallie Mae accepted a financial bailout from the feds in August, I resigned. As I stated in my exit interview, under the new statutory framework, I elected to no longer participate in the federal student loan program.

Allison has already announced his retirement and transition, so that option is not available to him.

Grant said...

Allison's reasoning probably runs as follows: The government is going to steal from us - a responsible, sucessful bank - and give it to our competitors: less responsible, less sucessful banks. We're past trying to reason with these people at Treasury. They're too fargone. This latest scheme proves it.

Let's get what we can from them (and the private whores who actually agree with them). We'll use it to undermine them in any way we can. God knows a few more BB&T Schools of Capitalism are just dying to be set up.

I see the down side - the sanctioning of evil. But who in the public would support a statement of public protest? The public just elected Obama.

Anonymous said...

To be honest, this does not surprise me. Some people say John Allison is an Objectivist, but I have seen no evidence that this is true. I have never heard him speak on any sort of philosophic topic. Yes, he gave money to ARI, but he (and BB&T) gave much more money to libertarian college professors.

Some of those professors may be good, I don't know. But I do know that BB&T gave $2 million to the Mercatus Center at George Mason University. George Mason has its heroes--Walter Williams comes to mind. But the money didn't go to George Mason in general or to the economics department there, and certainly not to Walter Williams. It went to the Mercatus Center. Who is at the Mercatus Center? Well, Tyler Cowen is in charge there, and he wrote this article:


Read this article, then think about this fact: John Allison and BB&T gave $2 million to the institution that this man runs. Does that sound like something a principled Objectivist would do?

Phoroneus said...

G men can twist arms pretty hard, and it's not just Allison's they would twist but every single person whos money he is responsible for. The reality is there isn't enough of a culture behind Allison to stand up and spit in the thugs face. In fact more people would probably applaud the government and throw tomatoes at Allison than congratulate him. There is simply not enough of us for a freedom stunt to meaningfully succeed. Don't we have enough enemies without cutting off our allies by the knees when they are faced with a horrible decision and have to make garbage choices?

Anonymous said...

Coincidentally, I met and saw Allison speak last night at the Thomas Howard lecture. I can assure all of you that he's completely on track; his speech last night was on point. Remember that the government doesn't ask politely for individuals to do things, it commands them.

Anonymous said...

Anonymous (the last) commented: " can assure all of you that he's completely on track; his speech last night was on point. Remember that the government doesn't ask politely for individuals to do things, it commands them."

I suspected that BB&T and Allison were victims of government extortion. I'm reminded of the scene in Atlas when the government attempts to extort from Rearden is agreement to participate in another "bailout," the Steel Unification Plan, in order to save Orren Boyle's failed company. So, fact is catching up with fiction, proving how efficacious a novel of ideas can be.

Ed Cline

Brad Harper said...

While researching Mr. Allison earlier this year, I found an interview where he answers quite a few questions based on fairly explicit Objectivist tenets. Link to interview found here:


I'm disappointed in BB&T's stance, but I'd bet there's a lot more to the situation under the covers.

That being said, what could justify a soft stance on this issue for someone loyal to reason and rights?

Betsy Speicher said...

Here is an explanation for Allison's actions from someone who knows exactly what happened: