How 'Atlas Shrugged' Kept a Bank from Disaster

There is a North Carolina-based bank which avoided the siren lure of quick profits over the last decade and yet managed to be profitable enough to withstand today's economic crisis.

Its secret? Following Objectivist Principles founded by the late Ayn Rand, reports Mark Hemingway of NRO.

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.”

John Allison, who retired last year as BB&T CEO, discovered Ayn Rand in the 1960s and based the bank's operating principles on her philosophy of self-interest capitalism, which is not the same thing as selfishness or greed. Bank employees are actually required to read "Atlas Shrugged," a move that no doubt would thin the ranks of the illiterate on the staff while raising the overall IQ.

However, not everyone is enamored of Miss Rand's books or philosophy, especially those who today she would have called social do-good "looters."

While aspects of Rand’s philosophy might legitimately be called controversial, Allison points out that she is misunderstood more often than not. Rand is often viewed as “extreme” because her defenses of capitalism and “rational self-interest” are seen as promoting greed and selfishness. Yet Allison is quick to note that the strong values and ethics that Rand’s philosophy promotes allowed BB&T to steer clear of shortsighted and greed-driven decisions.

“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.”

Many attack Rand's philosophy for its lack of altruism, but Allison points out that much of the economic mess roiling America today is the result of government-sponsored altruism:

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.”

Allison is enjoying his retirement by traveling about the country giving lectures on the housing crisis and his philosophical remedy to college economics students.

Perhaps there is hope after all.