BB&T chief executive John Allison weighs in on the proposed $700 billion bailout, saying there “is no panic on Main Street and in sound financial institutions.””
The Winston-Salem Journal has Allison’s entire 14-point letter to all 535 members of Congress, but here are the most interesting points:
Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis. These government supported enterprises distorted normal market risk mechanisms. While individual private financial institutions have made serious mistakes, the problems in the financial system have been caused by government policies including, affordable housing (now sub-prime), combined with the market disruptions vaused by the Federal Reserve holding interest rates too low and then raising interest rates too high.
Allison also has weighs in on executive compensation:
Arbitrary limits on executive compensation will be self-defeating. With these limits, only the failing financial institutions will participate in the “rescue,” effectively making this plan a massive study for incompetence. Also, how will companies attract the leadership talent to manage their businesses effectively with irrational compensation limits?
