A "banking guru" received a standing ovation this week when he told a group of Alabama business leaders that the federal government largely caused the 2008 financial collapse.
John Allison, former CEO of BB&T Corp., told the Birmingham Kiwanis Club that banks were not the primary culprits in the financial crisis. Instead, he placed the blame almost entirely on the federal government, drawing a round of orgasmic applause from the audience.
What should we make of this? Allison, a devotee of conservative icon Ayn Rand, has been making such comments since at least October 2008, so his words aren't new. Allison now is a professor at Wake Forest University, meaning he carries some weight--but the railings of one misguided former banker should not concern regular Americans.
We should, however, be concerned that business leaders wildly cheered comments that are so clearly off base. That tells us that business elites in Alabama, and probably elsewhere, have ignored the real issues behind the worst financial crisis since the Great Depression. If banking types have not learned from their mistakes, they are likely to make them again--and that can be bad news for all of us.
BB&T bought Montgomery-based Colonial Bank, after its failure, in 2009. BB&T now is the eighth largest commercial bank in the country, and you would think its former leader might know what he's talking about. But you would be wrong. Here is the gist of Allison's message, as reported by al.com:
Former BB&T Corp. Chief Executive John Allison told Birmingham business leaders that banks were not primarily responsible for the financial crisis that left the nation's economy teetering in 2008.
In a speech, Allison conceded that banks made irresponsible loans that inflated the sub-prime lending bubble, but he said that bankers weren't the chief culprits of the crisis. He said government agencies were pressuring the lending industry to make risky loans.
He singled the Federal Reserve, the Federal Deposit Insurance Corp., and government-backed mortgage lenders Fannie Mae and Freddie Mac for blame.
Never mind that the bipartisan Levin-Coburn Report, which Congress released in 2011, found the following: "The crisis was not a natural disaster, but the result of high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street."
High-risk financial products? Undisclosed conflicts of interests? The inability of the market to police itself? Allison had no interest in discussing those issues. Instead, he said the system needs "massive deregulation"--and he apparently said that with a straight face.
This was like throwing red meat to a pack of tigers on the Serengeti. Reports al.com:
After his speech, the Kiwanis Club audience gave (Allison) a standing ovation. Several people came up to him afterward and asked why he hasn't run for public office.
The reaction to Allison's speech is one of the most disturbing things I've read in a while. It's one thing for financial chiefs to make colossal blunders that led to historic economic pain. But to realize that many of them have not learned anything from that experience . . . well, it makes it seem that we all are on shaky ground.
The Nazi defense:"they made us do it."
And if Allison is a devotee of Ayn Rand(social Darwinism)he's probably cheering on the next financial crisis(massive deregulation.)
You know the guy is quacking when he states the solution to our current financial woes is "massive deregulation"--in the wake of the Levin-Coburn report showing that lax regulation was a big part of the problem. You have to wonder about a school like Wake Forest putting this guy on its faculty.
To acknowledge they were part of the problem would mean they would share some responsibility in cleaning up the mess. That is somewhere they don't want to go. Its all about ego & they do not want to admit they were wrong.
Canada, which has much stricter banking regulations avoided a lot of the 2008 disaster. Although our Prime Minister likes to take credit for it, his predecesors the Liberals were responsible. Had Harper had his way, we would be in the same shape as the Americans.
Wide spread deregulatin would permit these bankers to do exactly as they previously did. They made lots of money for themselves & the average person suffered. Whats wrong with that, from their point of view.
They most likely also applauded because he is a university professor, so he is supposed to be smart & hey he says what we did was o.k. Validation.
Unfettered greed is worshipped these days. The attitude of, "I'm all right jack" will lead to more serious social problems.
The average taxpayer needs to educate themselves on how politics & money works so they can ensure they don't wind up with anything & the 1% aquire even more assets.
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