Everyone has a price
Remember that piece I wrote on May 9, 2006 about BB&T, the North Carolina banking company? Disregard it.
It’s no problem if you don’t remember. I had to look it up myself. It was a column for the Raleigh News & Observer, in which I sang BB&T’s praises for declaring that it would not finance any commercial development of land seized by eminent domain under the U.S. Supreme Court’s godforsaken decision in Kelo v. City of New London. (You can save me the trouble of rehashing the whole issue by simply reading that column, which you’ll find here.)
All the air went out of my balloon of admiration for BB&T when I learned yesterday that it was getting $3.1 billion of federal government bailout money. BB&T is well-capitalized and certainly doesn’t need bailing out; in fact, its own spokesman pointed out, “We are probably one of the healthiest banks in the U.S.” But it’s taking the federal investment anyway — and is considering using it to buy other banks to expand its market share.
Let me make sure you understand: BB&T, untroubled and thriving, is taking our tax dollars meant to invigorate the economy and thinking about using it to finance its growth. That’s where a big slice of your bailout money is going — to a perfectly healthy bank which already has plenty of money to lend.
Wait. It gets worse. BB&T is headed by a fellow named John Allison, who is so great an acolyte of free-market philosopher Ayn Rand that he offered millions of dollars to colleges which agreed to make her landmark novel “Atlas Shrugged” required reading for some of their business students. Allison also requires his bank managers to read it. Yet here he is, essentially selling a chunk of his bank (the feds will get shares of BB&T preferred stock in return for the investment) to the very government he is philosophically inclined to keep at arm’s length.
Now we know the price of Allison’s convictions: $3.1 billion.
October 29th, 2008 at 8:13 am
Principles are one thing. Looks like 3.1 billion Yankee dollars is another. So the Federal Imperial US Government now owns a piece of BB&T. God help us! I can see some bureaucrat at a stockholders meeting pressuring the board to loan money to some clown that can not repay it. It could be your retirement dollars in a BB&T certificate of deposit. It could be your kid’s college fund. The Government is taking advantage of a financial panic to buy private sector banks. Is this just a precursor to a socialist takeover? Is there anyplace outside of that mayonnaise jar in the back yard that’s safe to keep your money?
October 29th, 2008 at 9:25 am
Now hold on there, Dan. You don’t know that 3.1 billion was the price of Allison’s convictions.
For all you know he sold out much sooner, much cheaper.
I just hate to give a person credit for holding out on convictions until the big bucks are produced when it’s entirely possible that he sold out his convictions eons ago for the price of a used copy of Atlas Shrugged.
October 29th, 2008 at 9:28 am
I too have admired BB&T and the way they have run their bank for many years. I sold major software products to all of these banks in NC and the country for 30 years and they were always a well run outfit even if that meant they didn’t buy everything I offered (and probably because they didn’t).
Their announcement about the Kilo decision was an incredible breath of fresh air. However, I am not sure I’m ready to throw them under the bus on this $3.1 billion stock sale. With the passage of that $850 billion bail-out aren’t these banks required by federal law to allow the government to buy shares of their stock? Was their any reasonable way to refuse it?
October 29th, 2008 at 1:46 pm
It looks as if BB&T did pursue the money and was not required to take it. First Citizens for example did not take the feds up on the offer. Good for First Citizens.
October 29th, 2008 at 5:45 pm
On the other hand, maybe all of the money should go to banks that are successful. I mean, why reward the banks that are doing a lousy job.
You would not reward your children by giving cookies to the ones that misbehave and give a lump of coal to the ones who are behaving.