BB&T chief to discuss economy

-- What caused the global financial crisis, frozen credit lines and what's the best way to fix them?

John Allison, chairman of BB&T Corp., is expected to address these issues when he speaks Monday evening at a meeting of the World Affairs Council of Greater Richmond, a nonprofit institution focused on the U.S. role in the wider world.

"We begin the year with a subject foremost on most peoples' minds -- what is happening with the economy?" said Council President Randolph Bell, former U.S. ambassador at large.

While most banks have been hurt by bad real estate loans, many are still profitable with strong capital levels, including Winston-Salem, N.C.-based BB&T, Bell said.

"Allison has spoken about the causes and cures and the need for accountability and responsibility," Bell said.

Allison, who was unavailable for comment, sent a letter to Congress last fall as the $700 billion bailout was debated. He noted that BB&T is a profitable $136 billion multi-state banking company with 1,500 branches in the mid-Atlantic and Southeast.

"We think it is important that Congress hear from the well-run financial institutions as most of the concerns have been focused on the problem companies," Allison wrote in his Sept. 23 letter to Congress.

"It is inappropriate that the debate is largely being shaped by the financial institutions who made very poor decisions."

He noted that the bailout was primarily for poorly run financial institutions and implored upon Congress that the bailout not damage well-run companies.

"There were a number of poorly managed institutions and poorly made financial decision during the real estate boom," he wrote. "It is important that any rules post-rescue punish the poorly run institutions and not punish the well-run companies."

Allison wrote that it was unclear why the government should bail out insurance companies, investment banks, hedge funds and foreign companies.

He blamed the mortgage crisis primarily on Freddie Mac and Fannie Mae, which caused market disruptions.

The panic was not in sound financial institutions, but rather in high-risk financial institutions and on Wall Street. He noted that market corrections are not all bad. The process, he said, eliminates weak competitors.

He advocated a tax credit for purchasing homes, noting that it would be less expensive and more effective than the rescue plan.

Bell said he expects 150 to 200 people to attend the Monday meeting.

Allison's presentation here continues the council's tradition of inviting major American chief executive officers and financial leaders to Richmond, Bell said.

They include Federal Reserve Chairman Ben Bernanke, former Treasury Secretary John Snow and Dominion Resources Chief Executive Thomas F. Farrell II.
Contact Carol Hazard at (804) 775-8023 or .