Bank Executive Opposes Regulating Financial Industry
The former chief executive officer of BB&T spoke at the University of Louisville yesterday about his business philosophy, and offered opinions on current financial issues. WFPL’s Elizabeth Kramer has more.John Allison spoke at the university’s College of Business, which received a $1 million grant from BB&T’s foundation to create a course and other activities that cover the economic philosophy of Ayn Rand.Allison says problems in the banking industry can’t be attributed to the free-market economy and that the government should not constrain the industry now."We need less regulation, but we also need more punishment for those who fail," he says. "So, that’s what we need, but if we move toward a more highly regulated environment which is on the table now there will be less variation, less profitability, less innovation, less creativity."Allison says in a global economy regulation could cause talented and motivated people to move to countries with less regulated environments.BB&T is the nation’s 10th largest financial services company and Allison is its current board chairman.Allison says the banking crisis came about because some had gotten help from the government in previous years and because many didn’t have enough capital to cover losses."The industry’s capital level should be dramatically higher, but the trade off ought to be that 95 percent of the regulations out to go away at the same time," he says. "The shareholders ought to be at risk, not the public and 95 percent of the regulations out to go."Allison says the focus on executive pay is misguided and should be on restraining government involvement."If you look at a lot of companies that have abused executive pay the most, they were companies that should have failed and we kept them in business," he says. "Classic example is City Group: In my career, City Group’s failed three times, bailed out three times, and every time they’ve gotten bigger and worse."He also says he supports the privatization of Medicare and Social Security.