There was a belief, shared by most American politicians, that owning real estate was a good thing and that society would benefit if the right to own a house were extended to people who couldn’t afford it. At the same time the government gave banks incentives to give sub-prime loans and when the Federal Reserve Board set interest rates below the rate of inflation the temptation to borrow became irresistible. The result was the massive property bubble, which burst in 2008.
As an Objectivist, and hence someone deeply sceptical of government interference, John Allison and his colleagues at BB&T declined to get involved in the sub-prime market. They are thus one of the few banks to come out of the crisis unscathed.
But there’s a bit of a mystery here. The main architect of the disaster, Alan Greenspan, who as chairman of the Federal Reserve Board kept interest rates unrealistically low, had been not only an Objectivist, but also one of the few members of Ayn Rand’s inner circle. It was in Greenspan’s power to avert the disaster, but he didn’t do so. My suspicion is that several decades after Ayn Rand’s death he was seduced by the trappings of power. If he had had John Allison’s strength of character the world might be a very different place.
*John Allison served as Chairman and CEO of BB&T Corporation from 1989 to December 2009. During his tenure as CEO, BB&T grew from $4.5 billion to $152 billion in assets.
The Harvard Business Review of Fame has recently recognized Mr. Allison as one of the top 100 CEO’s in the world over the past decade. In addition, Mr. Allison sits on numerous boards and is the Distinguished Professor of Practice at Wake Forest University’s School of Business.