The Corner

Here’s A Radical Thought

If you want to learn how to manage a winning baseball team, don’t spend a lot of time talking to losing baseball managers. If you want to learn how to make it in the music industry, don’t spend a lot of time talking to “artists” who’ve never had a gig or released an album. If you want to learn how to make a really good pasta from scratch, don’t spend a lot of time talking to, well, me.

In the current financial debate, if you want to figure out how policymakers can do the most good with the least amount of harm to market incentives, the broader economy, and American freedom, don’t spend a lot of time talking to Fannie/Freddie apologists and Wall Streeters. They have huge personal incentives to spin you, incentives that do not necessarily align with the interests of taxpayers. Instead, talk to leaders of banking and finance firms that continue to perform fairly well in a difficult environment.

John Allison is chairman of North Carolina’s BB&T, one of the biggest and most successful banks in the U.S. (though Tar Heel State rivals Bank of America and Wachovia are larger still). He is also a passionate believer in freedom (full disclosure: he’s a donor to my think tank and his company is a sponsor of my radio program). He dislikes the Paulson Plan, and thinks better alternatives exist. Here’s part of what he has to say in a new public letter on the subject:

BB&T is a $136 billion multi-state banking company. We have 1,500 branches throughout the mid-Atlantic and Southeastern states. While we have been impacted by the real estate markets, we continue to have healthy profitability and a strong capital position.

We think it is important for Congress to hear from the well-run financial institutions as most of the concerns have been focused on the problem companies. It is inappropriate that the debate is largely shaped by the financial institutions that made very poor decisions.


Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis. These government supported enterprises distorted normal market risk mechanisms. While individual private financial institutions have made serious mistakes, the problems in the financial system have been caused by government policies including, affordable housing (now sub-prime), combined with the market disruptions caused by the Federal Reserve holding interest rates too low and then raising interest rates too high.

There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial institutions and on Wall Street.

While all financial intermediaries are being impacted by liquidity issues, this is primarily a bailout of poorly run financial institutions. It is extremely important that the bailout not damage well run companies.

Corrections are not all bad. The market correction process eliminates irrational competitors. There were a number of poorly managed institutions and poorly made financial decisions during the real estate boom. It is important that any rules post “rescue” punish the poorly run institutions and not punish the well run companies.

A significant and immediate tax credit for purchasing homes would be a far less expensive and more effective cure for the mortgage market and financial system than the proposed “rescue” plan.

There’s a lot more. You can read the letter in its entirety here.

John Hood — John Hood is president of the John William Pope Foundation, a Raleigh-based grantmaker that supports public policy organizations, educational institutions, arts and cultural programs, and humanitarian relief in North Carolina ...

Most Popular


The Media Fell for Elizabeth Warren’s Spin

Do you want to know what media bias looks like? Earlier today, Massachusetts senator Elizabeth Warren released DNA test results that confirmed that she misled employers, students, and the public about her Native American heritage for years. Bizarrely, all too many members of the media treated the results as ... Read More

A Free People Must Be Virtuous

Dear Reader (Even those of you who didn’t seem to notice or care that I failed to file this “news”letter on Friday), So I’m sitting here at Gate C6 at O’Hare waiting for my flight home. I am weary, pressed for time, in desperate need of a shower, and filled with a great sense of dread for the work ... Read More
Politics & Policy

The World Keeps Not Ending

We were not supposed to have made it this far. George Orwell saw night descending on us in 1984. Orwell was, on paper, a radical, but in his heart he was an old-fashioned English liberal. He dreamed of socialism but feared socialists. He feared them because he knew them. I was in the sixth grade in 1984, but I ... Read More
PC Culture

‘White Women’ Becomes a Disparaging Term

Using “white men” as a putdown is no longer extreme enough for the Left. Now it is moving on to doing the same for “white women.” How rapidly this transpired. It was less than two years ago that the approximately 98.7 percent of white women working in media who were openly rooting for Hillary Clinton ... Read More