John Allison, CEO of BB&T, has published an open letter on the “rescue plan.”  Some of his points:

• There is no panic on Main Street and in sound financial institutions. The problems are in high-risk financial institutions and on Wall Street.
• It is extremely important that the bailout not damage well run companies.
• This is a housing value crisis.  It does not make economic sense to purchase credit card loans, automobile loans, etc.
• The proposed bankruptcy “cram down” will severely negatively impact mortgage markets and will damage well run institutions. This will provide an incentive for homeowners who are able to pay their mortgages, but have a loss in their house, to take bankruptcy and force losses on banks.
• If we had Fair Value accounting, as interpreted today, in the early 1990’s the United States financial system would have crashed. Accounting should not drive economic activity, it should reflect it.

Posted by: Old Grouch in Linkage at 15:16:40 GMT | No Comments | Add Comment
Post contains 158 words, total size 2 kb.