John Allison, the man who built BB&T Corp. into a banking powerhouse, is still an outspoken champion of free markets and small government. But it has been an uphill and sometimes lonely battle, as the government's power over the banking industry has grown progressively stronger in the past year.
Allison, who stepped down as BB&T's chief executive last year but remains chairman, is known as much for his Winston-Salem bank as he is for his philosophy. Let banks fail, Allison says, if they don't deserve to survive. Let foreclosures go forward. Let the markets work through their problems.
In an interview last week with Charlotte Observer staff writer Christina Rexrode, shortly before his pending induction into the N.C. Business Hall of Fame, Allison said he's "a little disappointed" that he seems to be one of the few CEOs publicly advocating for small government.
Questions and answers have been edited for clarity and length:
Q: Do you think ego was a problem for CEOs of other banks? Did that contribute to the financial crisis?
A: I don't use the term "ego" as much as I use the term "emotionalism." I think some of these people, very bright in many ways, got caught up in emotional issues because they wanted their bank to be bigger than the other guy's bank and didn't impose self-discipline.
Q: You're a free-market guy, but should we break up banks that are too big to fail?
A: I have generally been opposed to antitrust laws. Being big by itself is not bad.
But on the other hand, if the government has decided these companies are too big to fail, they almost have to break them up because they're going to undermine the marketplace. In my career, Citigroup has failed three times, and each time they've gotten bigger and worse. I don't believe they are too big to fail, by the way. You can have a failure process just like you have bankruptcy laws.
Q: So what do you propose?
A: I would set a much higher capital standard for banks - sometime in the future, over a reasonable period of time, so they have time to raise the money. The banks that are healthy would be able to raise capital. The banks that aren't would be forced to shrink.
Q: When will we get out of this recession?
A: I believe we are in the beginning of a recovery, and we're going to see some positive comparisons, but that's partly because last year was so bad.
There are two reasons [for the recovery]: I think we do have a very resilient economy, and we do have a lot of economic stimulus [from the government]. However, many of the stimulus actions we've taken will reduce our standard of living in the long term. ... It's so tempting because it sounds good in the short term: "We're going to spur growth now."
