Sound Banking vs. Socialism
Somehow, I missed this the other day….
John Allison, the CEO of Branch Banking & Trust, Co. (BB&T) wrote an open letter to Congress saying that the “bailout” is a bad idea.
He has several key points and the first one leaves no doubt as to what he believes:
1. 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 caused by the Federal Reserve holding interest rates too low and then raising interest rates too high.
It isn’t just econ professors, detached from the actual industry, that are calling out the government on this. Maybe there is still a ray of hope for capitalism….?
NM
