I Am John Galt (11 page)

Barack Obama disagrees. When he spoke in Tucson the following week, Krugman no doubt felt personally dressed down when the president said, emphatically, regarding whether the “lack of civility caused this tragedy,” that “It did not.”
82

But if it
did
, then by Krugman's own theory of a “climate of hate,” this assassination attempt could be seen as the deadly fruit of seeds he himself had sown years before when he began to use the
Times
—America's “newspaper of record”—as a platform for personal destruction of his enemies.

Chapter 3

The Leader

John Allison as John Galt, the man who walked away after building America's strongest bank

“He turned and answered, ‘I will stop the motor of the world.' Then he walked out. We never saw him again. We never heard what became of him. But years later, when we saw the lights going out one after another, in the great factories that had stood solid like mountains for generations . . . and the world was crumbling quietly, like a body when its spirit is gone—then we began to wonder and to ask questions about him. . . . You see, his name was John Galt.”

—Atlas Shrugged

In November 2008, 30 days before his scheduled retirement, John Allison sat atop a black office tower in Winston-Salem, North Carolina, preparing to sign away his life's work.

He'd spent 37 years, his entire career, at BB&T (or, more formally, Branch Banking and Trust Company). When he arrived in 1971, it was an obscure farm bank with 250 employees and $250 million in assets. Allison became president in 1987 and chief executive in 1989, and by 2008 he was the longest-serving bank CEO in the United States. Under his leadership BB&T had grown into a bank holding company with 1,800 branches sprawling over 12 Southern states and Washington, D.C., among the top 10 banks in all but one of those markets. BB&T has 30,000 employees and over $150 billion in assets, making it the 12th largest U.S. bank.

Now he was being forced to give substantial control of it to the U.S. government.

And not because BB&T had failed, as so many other banks had in the terrifying banking crisis of 2008. No, BB&T was being punished because it had succeeded.

BB&T had made no subprime mortgage loans. While other banks blew themselves up with high-fee negative amortization and “pick-a-payment” loans that supported a cancerous housing bubble, BB&T resisted temptation and wrote only conventional mortgages.

Yet after Congress enacted the Troubled Asset Relief Program (TARP), banking regulators forced even healthy banks to take government money, that is, to accept the government as a shareholder. That meant committing to pay the government hundreds of millions in preferred dividends, and giving up valuable warrants so that the government could later purchase common stock at fire-sale prices. Adding insult to injury, Allison had to sign a waiver that allowed the government to unilaterally change the terms of his compensation from the company he'd served for 38 years.

But he had no choice. BB&T was a strong bank, with more than enough capital and more than enough liquidity to see it through the crisis, and a strong loan portfolio. Yet his banking examiner from the federal government told him that the rules had suddenly changed.

According to Allison, “They called us and said, ‘Okay, we've had these capital rules forever, and you guys got a lot more capital based on those rules. But we've decided we're going to have some new capital rules. And based on these new capital rules, we don't think you have enough capital. Now, we don't know what the rules are, but we're confident that if you don't take the TARP money, you won't have enough capital.'”
1

Allison knew that the bank examiner was just a messenger boy for his bosses in Washington, D.C., where the Federal Reserve under chairman Ben Bernanke was desperate to save a few insolvent megabanks, even if the entire banking system had to pay the bill do it.

Allison says, “There were three large financial institutions in serious trouble in the capital markets.” Presumably he means Citigroup, Bank of America, and General Electric Credit. But Bernanke didn't want to reveal to the public how weak these three really were—so
all
banks would be forced to take TARP money. “He felt like if he forced all the large banks, all the $100 billion banks and over, to participate, the market couldn't figure it out. . . . It was a huge rip-off for healthy banks.”

Allison signed. He had to. He had adamantly opposed TARP when it was being debated. He thought it was wrong. He thought it was unfair. He thought it was unnecessary. But he had to sign. A Southerner who often expresses himself in gracious understatement, Allison says, “To be forced to do that with 30 days left in your career, on something you were adamantly opposed to in the first place, was not much fun.”

For Allison, it all had a certain sense of déjà vu. Specifically, as he puts it, “It is right out of
Atlas Shrugged
. I mean, it's eerie. It is eerie. It is eerie.”

And Allison should know. All his life he has been inspired by
Atlas Shrugged
and the other works of Ayn Rand. He explicitly created BB&T's management philosophy on Randian principles of Objectivism, and for decades he has required all BB&T executives to read
Atlas Shrugged
.

BB&T is the bank that
Atlas
built. Its success, and its durability in a crisis that destroyed so many other banks, is testimony to the real-world, real-money impact of Rand's value system: purpose, reason, and self-esteem. The crisis itself is testimony to the real-world consequences of the philosophy of Rand's villains—the looters, the power seekers, and the altruists.

Like Rand's greatest hero, John Galt, Allison chose to walk away from the looters' world at the height of his powers. He started eyeing the exit after the 2002 passage of the Sarbanes-Oxley Act. He says, “That was kind of a precipitating event, where you were considered to be a criminal if you were in business, and that things were considered fraud that were just honest business mistakes. I mean just the whole tone changed—criminalization of honest business activity.”

Retiring at a young and vigorous 58 years old amid a crumbling banking system, Allison has left behind the bank that
Atlas
built. Like Galt, he's devoting himself no longer to business, but instead to evangelism for the morality of capitalism.

Discovering Rand

No one would have predicted that John Allison, born in Charlotte, North Carolina, and raised in a deeply religious family, would turn out to be an Ayn Rand devotee, and certainly not the real-world embodiment of Rand's great hero. As with so many Rand-heads, the conversion happened in college.

Allison was at the University of North Carolina, Chapel Hill, majoring in business administration. In his economics classes, he says, “even though my professors were largely left-wing, they actually pushed me to the right because I didn't agree. Their ideas just didn't make any sense. They weren't my experience in life. So it's funny: I think they intended to indoctrinate me to the left, and they ended up pushing me right.”

Then, between his junior and senior year, he discovered Ayn Rand.

Most people start with the fiction,
The Fountainhead
or
Atlas Shrugged
, seduced into Rand's philosophy as they are swept away in the heady romanticism of these compelling stories and their mythic heroes. Not Allison. He started with Rand's nonfiction masterpiece,
Capitalism: The Unknown Ideal
(published in 1966), stumbling upon it by chance in a bookstore.

Allison says, “I was really impressed with particularly the first part of the book where she talks about the principles underlying capitalism.” Though Rand's philosophy was aggressively secular, it appealed to Allison's religious instincts. “I was raised in a very religious background which put a premium on values, and derived in a religious way, so I guess in a certain sense I've always been interested in the issue of principles—how you really should live your life.”

He was hooked. He says, “Then from that I read
Atlas Shrugged
, read
The Fountainhead
, and then basically read everything I could get of her materials and every book she recommended.”

After getting his master's degree in management from Duke University, in 1971 Allison went to work for BB&T in the small farm bank's loan administration group. Amid a group of stodgy older executives, Allison's boss was a bright young go-getter who put Allison into the bank's management development program. But that consisted pretty much of just slumming on the teller line for a while to see how the other half lived. After 10 months, Allison's bright young boss figured out that Allison himself was a bright young man, and challenged him to create a real management development program.

It turned out that Allison and his boss were both Rand fans. So the first thing they did in the new program was give everyone a copy of
Atlas Shrugged
. Allison remembers, “We got a lot of the future leadership to read
Atlas.
. . . It wasn't officially required, but it was officially encouraged. . . . A lot of the best people did read it.”

By 1973 four other bright young men had showed up at BB&T, and joined Allison in what would turn out to be the leadership nucleus of a Rand-based build-out of the sleepy farm bank into a colossus. They all read
Atlas
and they all were transformed. Allison says, “Anybody that reads
Atlas Shrugged
—that comes with a general business background in particular—it does change their worldview. They may say, ‘Well, I reject this aspect of Rand,' or ‘I reject that aspect,' but . . . the particular thing I think almost everybody gets out of it is the destructive role of government.”

For Allison himself, Rand resonated with his personal quest for meaning in life. He recalls, “Before Rand, first I had a hodgepodge of philosophical beliefs. I was trying to be religious, but I wasn't really active in a way that was consistent with the religion that I was taught, so I was torn in a certain sense. I made pretty good grades, but I was just doing my schoolwork to make good grades. It didn't have any bigger meaning to me. When I saw her characters, spiritually what I got was, man, they're purposeful and they're doing it in ways that I could enjoy—building a business.”

Like Allison, the new leadership nucleus of BB&T were Southern-born and deeply religious. For some, Rand's aggressive atheism didn't sit well, and still doesn't.

Kelly King, who has succeeded Allison as CEO, recalls that he reacted favorably to
Atlas Shrugged
when he first read it at Allison's request: “I kinda liked the book. I hate big government. I like capitalism. I like productivity.” But later, on learning more, he found, “I disagree with her need to take reason to its ultimate extreme, which of course defeats all forms of mysticism and faith. I don't find that to be productive or necessary in business.”

But Allison says, “Our agreement was to try to take religion out of the bank. This was a secular organization. People were entitled to their religious beliefs, but the bank had to be run by some secular principles. That's the agreement with the shareholders of how you run the bank. . . . And they respected that.”

The Man with a Purpose

Allison became president of BB&T in 1987, and chief executive in 1989. He continued to spread the word about Rand and get everyone to read
Atlas Shrugged
. But the Randification of BB&T kicked into high gear in 1994. That's when Allison discovered
Objectivism: The Philosophy of Ayn Rand
, written three years earlier by Rand's longtime associate and designated intellectual heir, Leonard Peikoff.

“Though I'd read all of Rand and agree with it,” Allison says, “I really, in retrospect, didn't truly understand it. I understood its politics, and I understood parts of it, but I never was able to totally integrate it until 1994, when I read
Objectivism: The Philosophy of Ayn Rand
. And that was a huge integrating event for me, because I was able to really get it from A to Z.”

For Allison “the timing was great,” because the next year came the seminal event in BB&T's rise to dominance in the Southern banking market: the merger of equals with competitor Southern National Bank, handing CEO Allison the challenge of integrating two $10 billion giants.

It was a classic integration problem: How do two proud business cultures come together as one? And the most pointed question: Faced with the inevitable functional overlaps between two similar businesses, who lose their jobs and who keep their jobs?