NYT Article about BB&T, Allison, Rand, and Objectivism

See the really good New York Times article about BB&T bank and its chairman John Allison, and the connection with author/philosopher Ayn Rand and her philosophy, Objectivism: Give BB&T Liberty, but Not Bailouts. It talks about Mr. Allison and BB&T, but also the significant increase in interest in Rand and Atlas Shrugged in the past year. It includes criticisms as well (page 2 of the web edition), which I disagree with.

The commonplace overviews of Rand and Objectivism is included, but what was most interesting in this article was the part focusing on Allison and BB&T Bank:

He started at BB&T, once known as the Branch Banking and Trust Company, in 1971 and became chief executive in 1989, when the bank had $4.7 billion in assets.

By the time he retired as C.E.O. in December, he had overseen 60 bank and savings-institution acquisitions and turned BB&T into the 11th-largest bank in the nation, with $152 billion in assets, according to the bank.

A 60-year-old who speaks in a rapid-fire Southern accent, Mr. Allison says the current financial crisis is primarily the government's fault. He criticizes the Fed as trying to manipulate normal business cycles and Fannie Mae and Freddie Mac as facilitating mortgages to people who couldn't afford them.

The government's remedies have made matters only worse, he says: "Almost everything that has been done since this crisis started is going to reduce our long-term standard of living." Mr. Allison says the government forced BB&T and some other healthy banks to accept TARP money to obscure that they were simply trying to save several large banks like Citigroup.

"Everyone thinks we got some kind of subsidy," he says, noting that his company paid the money back in June, with interest. "It's going to cost us about $250 million for money we didn't want."

He suggests that government get out of the way and let businesses start making money again. An example of how to make money? Look no further than BB&T, which, he says, has a proven formula for success that centers on "an uncompromising commitment to reason."

Under Mr. Allison, new executives were handed a copy of "Atlas Shrugged." All employees get a 30-page pamphlet describing BB&T's philosophy and values: reason, independent thinking and decisions based on facts.

"Wishing something is so does not make it so," Mr. Allison says. "I guarantee that long before the rest of us knew, those geniuses at Lehman Brothers knew that something was wrong, but they evaded it."

Mr. Allison was introduced to Ms. Rand's work in college, when he read her book "Capitalism: The Unknown Ideal." He describes egalitarianism as the "most destructive principle in our society" and believes that the best employees should receive the most rewards.

"It's not true that everybody is equal," he says. "A lot of business people don't want to deal with nonperformance."

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.

...

Although BB&T has had problems during the financial crisis, it has outperformed its peers and remained profitable. After the government stress-tested major banks' balance sheets in May, BB&T wasn't required to raise additional capital.

"The philosophy has clearly been a competitive advantage," Mr. Allison says.

Atlas Shrugged: 52 Years Old, but an Amazon.com Category Best Seller

Yes indeed, Atlas Shrugged is currently the #1 bestseller in Amazon.com's Fiction and Literature category. It ranks higher than many new releases, such as John Grisham's latest. Oh, and that is just the ranking of the mass paperback edition... other editions of Atlas Shrugged also rank 7th and 8th on this list at present, while her novel The Fountainhead ranks 13th.

Atlas Shrugged has remained a popular novel over the years, its length of 1,100 pages not deterring readers. But the eerie similarities between parts of its storyline and the goings-on in Washington these days is what is clearly driving this significant increase in interest.

How Many Will Choose To Shrug?

Here is an interesting item... apparently a resignation letter from an AIG employee to their CEO. The most disturbing aspect of this is on page 2, where he notes "the only motivation" remaining for AIG employees: fear from politicians "naming and shaming" them. This letter, the events that prompted it... again, this is very reminiscent of Atlas Shrugged. I wonder how many other people -- at AIG or elsewhere -- will be as brave as Jake DeSantis and choose to "shrug"?

Coming Next? Make Them Stay at AIG

The blog Titanic Deck Chairs had a nice posting titled AIG Bonuses and Retention Contracts -- A Proposed Solution. Does this seem farfetched? I could see Barney Frank and the others at least suggesting this solution. I'd like to think there would be enough of an outcry from other legislators -- and the "American people" -- to keep it from happening.

Regardless, this was an interesting, provocative post, with a great reference to Directive 10-289, from Atlas Shrugged here!

WSJ Item on Rand's Relevance

I liked Yaron Brook's opinion piece that was published by the Wall Street Journal recently: Is Rand Relevant?

Ayn Rand, Atlas Shrugged, and the Tea Party Protests

My friend Paul Hsieh wrote a great two-page (short) article titled "Ayn Rand the Tea-Party Protests". Like countless other articles in the past few months -- including articles in just about any major newspaper or business magazine -- he begins by noting the resurgence in interest in (and sales of) Ayn Rand's epic novel Atlas Shrugged. But then what sets Paul's writeup a part from most of the others is his accurate attention to Rand's ideas and philosophy. Many other recent articles either only cover the book sales increase aspect of the story, or mangle (intentionally or not) Rand's views in ways great or small. So if you don't read any other similar such articles, please do read Paul's two-parter here.