NRO on John Allison

 Posted by on 1 May 2009 at 9:00 pm  Business, Objectivism
May 012009

The April 30, 2009 National Review Online published an excellent article on banker John Allison (former CEO of BB&T Bank), including an extended discussion on how his success in business was a consequence of following Ayn Rand’s philosophy of Objectivism.

Here are a few excerpts:

Objectivist Philosophy for Fun and Profit
How a banker avoided ruin by cleaving to Ayn Rand’s system of ethics
By Mark Hemingway

…The fact that BB&T didn’t dive head-first into the shallow pool of subprime mortgages certainly goes a long way toward explaining the relative health of BB&T as an institution. But how was BB&T able to resist chasing after all that new mortgage money?

The answer is simple: Subprime mortgages were bad for the people who took them out. That went against BB&T’s philosophy — not for reasons of altruism but because it would have been poor strategy. “We’re obviously a for-profit company, but we don’t think that it’s good business in the long term to do bad things to your clients, even if you make a profit doing it,” Allison said. “So we chose not to do negative-amortization mortgages because we knew it was going to get a lot of people in financial trouble.”

In retrospect, the wisdom of this approach might seem obvious. However, Allison navigated through the overheated mortgage market and the ensuing banking crisis by relying, in large part, on a philosophy that many others are now turning to: “I got interested in [Ayn] Rand in the late 1960s. I read Capitalism: The Unknown Ideal. I had already been interested in economics, and as I finished college, I got interested in finance. I saw the banking system as central to a capitalist economy.”

Allison understands the tie between abstract philosophy and real-world business success:

…”A lot of people miss the fact that Rand has a very strong ethical system,” he observes. “Rand says you can derive ethics from reality. If anything, Rand is more rigorous in her ethical system than most codes are. If you’re dishonest, you are disconnected from reality, and that has consequences.”

However, simply because Rand doesn’t endorse altruism for altruism’s sake, many people misconstrue her to be amorally selfish. Rand “doesn’t view ethics as self-sacrificial,” Allison says, “she views ethics as a rational means to success and happiness. If you described her in principle, she would say that you shouldn’t take advantage of other people because that is unethical behavior and self-defeating. But you also shouldn’t self-sacrifice. What you really need to do is run your life in relationship to other people in context to what she calls the trader principle. The trader principle is about what I call creating win-win relationships. We trade value for value and we get better together, and we find these common grounds where we can get better together.”

If that can be said to be BB&T’s guiding principle, the empirical evidence would suggest that the bank’s customers and shareholders are better off for it. In fact, it was misguided altruism that got us into the current financial crisis, and Allison has no problem identifying whose economic philosophy was flawed. “I think that government policy is the primary cause” of the financial crisis, he says. “Government policy set up the problems we have in the real-estate market, and it is the Big Kahuna in the room.”

(Read the whole article.)

Objectivists will recognize BB&T’s core values as the keys to success in business and life:

* Honesty
* Integrity
* Justice
* Reason
* Independent Thinking
* Reality
* Productivity
* Teamwork
* Self-Esteem
* Pride

How well did that code of values work out for BB&T shareholders?

When John Allison became CEO of BB&T in 1989, the bank had 187 branches in two states, with $4.7 billion in assets.

When he retired as CEO at the end of 2008, BB&T operated over 1500 financial centers in 11 states (plus DC), with $136.5 billion in assets, a track record Allison can be proud of.

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