A letter to Congress

On September 23, 2008 John Allison, CEO of Branch Banking and Trust Company writes to Congress expressing his concern at the bailout. It should be noted that BB&T has $136.5 billion in assets and approximately *1,500 financial centres.

The full letter can be read here, the following is a summary;

1. Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis

2. There is no panic in Main St and in sound financial institutions

3. This bailout is of poorly run financial institutions

4. Corrections are not all bad

5. Tax credits for home purchases would be far more effective

6. This is a housing value crisis

7. Guaranteeing money by the US Treasury places enormous risks for taxpayers, the banking industry and distorts financial markets

8. It is unclear why the govt should bail out insurance companies, investment banks, hedge funds and foreign companies

9. Without a market price it is unclear how the govt will price real estate assets

10. Bankruptcy “cram down” will increase risk and make future pricing higher.

11. Fair Value accounting (mark-to-market) does not work if there is no market – accounting should not drive the economy, it should reflect it

12. New merger rules are creating uncertainty for high quality companies who are considering purchasing weaker companies

13. The primary beneficiaries of the bailout are Goldman Sachs and Morgan Stanley – Treasury is totally dominated by Wall St and has no knowledge of the commercial banking industry

14. Arbitrary limits on executive compensation will be self defeating as companies will not be able to attract leadership talent to manage their business effectively


*BB&T Corporation is an S&P 500 Company listed on the New York Stock Exchange under the trading symbol BBT.
Ranked as the 14th largest financial holding company in the United States.
Total assets at $136.5 billion.
More than 546 million shares outstanding.
Manages more than $20 billion in trust assets.
Ranked among the 2003 World's Top 50 Financial institutions for Market Capitalization by Retail Banker International.
10-year compound annual dividend growth rate is 12.3 percent compared with 5.3 percent for the S&P 500.
Over the last five years, BB&T's total compound annual return to shareholders is 7.8 percent compared with 6.2 percent for the S&P 500.
10-year total compound annual return to shareholders is 12.5 percent compared with 9.4 percent for the S&P 500.
37th consecutive year of increases in dividends paid to shareholders.
104th consecutive year of dividend pay out to shareholders.