Allison: BB&T Grabbing Customers From Rivals To Boost Loans
30 January 2009 - 11:30PM
Dow Jones News
BB&T Corp. (BBT) Chairman John Allison said his bank, one of
the few major recipients of government capital to boost lending in
the fourth quarter, was having difficulty eking out new loan
business from its existing clients.
Allison said the bank was grabbing business from weaker
competitors, as the better borrowers have become extremely
cautious.
"The truth is we're mostly moving market share, because a number
of our competitors are under pretty severe duress, so we're picking
up clients," he told Dow Jones Newswires Thursday.
"It's not that we wouldn't lend to our own clients," he added.
"They're just not borrowing."
He said he was extremely worried about the unemployment rate
climbing above 10%, a level that he said would be economically
destructive "for almost all businesses."
Allison, who just stepped down as BB&T's chief executive at
the end of last year, made the comments after a speech in
Washington, in which he argued the government, not the private
sector, is to blame for the financial crisis. He gave the speech at
an event organized by the Ayn Rand Center for Individual
Rights.
Allison also took aim at the financial rescue, saying the
government efforts to shore up the banking industry had only spread
panic among consumers. Had the Fed, the Treasury and the Bush White
House not asked for $700 billion to bail out the financial system,
"real estate markets would have been recovering right now in my
opinion," he contended. "People got scared."
BB&T, based in Winston-Salem, N.C., got $3.13 billion of
capital from the Troubled Asset Relief Program, or TARP. The bank
has lent nearly $1.6 billion of the money. It was one of only three
of the major bank recipients of TARP funds to boost lending during
the fourth quarter.
Though he allowed that there have been benefits from the
government cash, Allison said that BB&T unwilling agreed to the
infusion because it was prodded hard by its regulators. The bank
was also moved to apply for the cash for fear of being placed at a
competitive disadvantage, he said.
Allison criticized TARP for shoring up a lot of shaky banks. He
also argued the nine national banks, including Citigroup (C) and
Bank of America (BAC), that were forced to accept government
capital infusions last fall now enjoyed a long-term funding
advantage because they had been essentially branded "too big to
fail" by the government.
Allison proposed a generous residential real estate tax credit -
on the order of 10% and applied only to purchases of existing homes
- as the cure for the financial crisis.
As for its cause, Allison listed a series of culprits, including
the Federal Reserve, the Federal Deposit Insurance Corp., fair
value accounting and U.S. housing policy as directed through Fannie
Mae (FNM) and Freddie Mac (FRE).
Washington politicians espoused an almost "religious belief in
affordable housing" that caused a massive over-investment in
housing, while federal deposit insurance spawned a lack of market
discipline by making it easy for banks to raise funds.
However, Allison reserved some blame for the rating agencies and
allowed that credit default swaps were "misused" by some market
participants.
-Jessica Holzer, Dow Jones Newswires; 202-862-9228;
jessica.holzer@dowjones.com
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