BB&T to get $3.1B of bailout funds

Did everyone see the news yesterday that BB&T agreed to transfer preferred stock to the government in exchange for $3.1 billion of the bailout money? BB&T was not in any financial trouble and plans to use the funds primarily for acquisitions and other business growth options rather than lending it all out. John Allison, the CEO, is the same guy that donates copies of Rand's books to schools in order to get her message out to the general public, while demonstrating that he doesn't understand or intend to practice that message himself!

Does anyone know of any positive example of someone acting with honor any longer? Sure, there are lots of words being spouted all over the place, but I crave to see someone actually putting those words into service.

Regards,
--
Jeff

Post 1

Wednesday, October 29, 2008 - 3:30pm

Is it possible the transfer of preferred stock is not as "voluntary" as we are lead to believe?

Post 2

Wednesday, October 29, 2008 - 3:35pm

No, an Objectivist does not forgo welfare. He simply does not vote for or advocate welfare. If the government is giving away free money the Objectivist would be an altruist and a fool not to take his share.

Post 3

Wednesday, October 29, 2008 - 3:50pm

Jeff, I had the same thought as you.

The link's last paragraph says:

In a separate statement released Tuesday, Allison said it was important from a business perspective that the company take advantage of the same low capital costs as its competitors.

Ah, the herd mentality. Gotta keep up with the competitors no matter what.

Edit: I thought it was admirable when John Allison said BB&T would make no loans on property acquired by eminant domain after the Kelo decision. Accepting bailout funds offsets some of those points.

(Edited by Merlin Jetton on 10/29, 4:35pm)

Post 4

Wednesday, October 29, 2008 - 5:20pm

That's one of the problems with a mixed economy - no matter where you draw the line you get tainted in some way or another. As a CEO he has an obligation to his stockholders to get the lowest cost of capital, yet as an honorable man who is aware of the moral issues of bailout money he could choose not take it and make a public statement about not taking it - he is hosed if he does, and hosed if he doesn't.

Post 5

Wednesday, October 29, 2008 - 5:36pm

Ted wrote:

As an Objectivist, I completely disagree with this viewpoint. An Objectivist lives by a set of principles and standards that he or she sets for themselves. They do not adopt a relativist moral perspective based upon what others around them are doing. It is either right or it is wrong for the government to be taking taxpayer funds and using them to nationalize the financial, automotive, energy, or any other industry or economic concern. If it is wrong, then no Objectivist should be voluntarily participating in that activity. Case closed. There is no valid alternative perspective in this situation.

The case that Rand discussed regarding taking Social Security is a really gray area since everyone has been compelled to contribute to this Ponzi-scheme "savings" plan throughout their life, thus precluding many from engaging in sensible personal retirement investment themselves. So a strong argument can be made that accepting Social Security payments is simply getting back what was originally taken from us. However, since this is not a true savings/investment scheme, acceptance of Social Security is actually robbery from today's employed just as we were robbed when we were ourselves employed. It is a particularly pernicious program because it makes us all criminals in the course of surviving during our retirement, and in the process desensitizes everyone to the true nature of theft. And as an example of this, I offer the case of BB&T.

Our horrible mixed-economy/welfare state makes for a lot of potential gray areas as we lead our lives. However, I suggest people consider the actions of Dagny Taggart in her pursuits of building the John Galt Line in the face of tremendous obstacles. Did Rand show Dagny availing herself of the government options available to her as Ted suggests she non-altruistically should? No, she struggled to accomplish her goals morally, despite the difficulties being imposed upon her. That is the heroic course and it is an example of the application of Objectivism in action.

I get incensed at constantly getting the message on Objectivist forums that it is in my best interest to grab a share of the public booty stolen from others or to go ahead and murder another person when I find myself in desperate straights. These are not heroic actions and they are not applications of what Rand conceived of as one's rational self-interest.

Mike may be correct that the government is using unspecified strong-arm tactics with these nationalization programs which the participants are not allowed to reveal. It wouldn't surprise me after seeing this country roll over for the provision in the Patriot Act that make it a crime to inform anyone that they are under surveillance by the government.

Regards,
--
Jeff

Post 6

Wednesday, October 29, 2008 - 7:09pm

You are arguing with Rand, Jeff, not me.

Post 7

Wednesday, October 29, 2008 - 8:49pm

Ted,

Rand pointed out, in a different context, that you don't stop the juggernaut by throwing yourself in front of it, but she also penned this line, "I swear by my life - and my love of it - that I will never live for the sake of another, nor ask another man to live for mine." And that seems to be on point in this context.

I'm with Jeff on this. When I'm of age, I'll request my social security payments - as mine - I paid in more than I'll ever collect. The fact that the government manages this alleged "insurance" fund in a way that would put real insurance company managers in jail, isn't anything I had any choice about.

I would never go ask for food stamps or any other handout. That's me. Ragnar Danneskj�ld took back taxed/confiscated funds at gun point yet it is morally questionable to accept a piece of it voluntarily. And I hate that it has this fuzzy, greyness to it.

There are levels of morality here: The most immoral act is to be the person that takes money from someone to give to someone else (Politicians and government workers go into this category). It gets top billing because individual rights are violated. Second-most immoral is to advocate for such a program. A person has the right to make that suggestion, but it is still immoral to be advocating for programs that violate rights. Bringing up third place, is accepting unearned wealth that was taken from others. To a degree, it is accepting stolen goods. I believe it shows a lack of integrity, a lack of character, for people to get in line for handouts of money taken from others. From a self-esteem point of view it isn't good for a someone to accept the unearned.

Post 8

Wednesday, October 29, 2008 - 8:58pm

Well said Steve.

Regards.
--
Jeff

Post 9

Thursday, October 30, 2008 - 3:25am

Allow me to weigh in with Steve and Jeff on this. We all have our areas of disagreement with the personal preferences of Ms. Rand -- as opposed to the established truths of Objectivism. The question of a woman being President of the United States is a perfect example.

A few years back, when this was SOLO, I brought up the issue of working for the government, as so many here (there) seem(ed) to do. One response I enjoyed was from a musician who said that government dominance of the field forced him to work as a public school teacher (university professor, I believe, actually) in order to be a musician. Of course, this all goes back to the lame excuse that Ayn Rand crafted for a certain young philosopher who realized that there was not a lot of money in the marketplace for philosophy. Also, of course, many of Rand's readers -- sources of income via royalties -- were in colleges, at public institutions, taking government money, as well as private scholarships. Conflating the two -- scholarships and Pell Grants -- Rand said that it was perfectly all right to take government largess as long as you were morally opposed to it. That, of course, is hypocricy.

(More on this in another thread, later.)

Post 10

Thursday, October 30, 2008 - 7:57am

I tend to side with Ted (and Rand) on this one. I'm not utilizing any public welfare either (for what that's worth).

I sense a disturbance in the Force.

:-)

An integration that I'm afraid to perform right now -- is to integrate the arguments in this thread with the Bill Dwyer thread on "moral rapists" (rapists acting morally). The reason I'm afraid is that, if the two threads integrate -- then that makes me wrong on at least one of the two accounts of the matter (via the law of contradiction). Both threads deal with the issue of psycho-spiritual (identity-) consistency vs. instrumental value. In the other thread I argued for psycho-spiritual consistency. In this thread, I argue for instrumental value.

Ed

Post 11

Thursday, October 30, 2008 - 8:24am

First, I haven't said that BB&T "should" accept the investment, only that according to Rand the matter is debatable.

Second, I understand it is not a "gift", but that the government is buying shares.

Third, should this company simply pass up what it sees as an opportunity, and see its competitors put it at a disadvantage? What is the difference between this situation and accepting farm subsidies or other types of government grant?

The issue here is particularely annoying because we see it as a new abomination. We oppose the "buyout." And perhaps thsoe who accept buyout money are making a mistake. Maybe the strings attached aren't worth the cash benefit.

But it is not a simple matter to condemn a business because it plays by the rules of the game, no matter how unfair those rules are. Rand saw this, and she did not demand that people refuse to take the same handout that is available to others.

Post 12

Thursday, October 30, 2008 - 9:10am

Right, Ted.

At one point in CUI, Rand rails against the railroad-bashers who charged the so-called robber barron CEOs of railroads with accusations of hypocrisy because they were playing by the rules of the enforced game. She said that it wasn't their fault that they bribed committees to grant land for new railroad construction -- because bribes had become the only thing that worked, in the corrupt system back then.

Don't blame businessmen for the moral failings of bureaucrats. That's what's always been done (and what got us where we are today).

Ed

Post 13

Thursday, October 30, 2008 - 11:55am

Ed wrote:

That's what's always been done (and what got us where we are today).

And there's the answer. The world doesn't collapse overnight. It erodes away from the steady drip, drip, drip of compromise of one's principles until there is nothing but a thin veneer of words left defending a once magnificent and honorable edifice of virtue. At that point, all it takes is a small breeze to blow the whole thing over and reveal that those words were hollow and supported nothing. Look no further than Alan Greenspan as just one of many shining examples.

Consider the First, Second and Third points in Ted's post #11 above. These are all just rationalizations one tells oneself in order to justify a course of action that one takes, knowing it to be wrong. Well, wrong is wrong and no amount of rationalization is going to change that.

But it is not a simple matter to condemn a business because it plays by the rules of the game, no matter how unfair those rules are.

If anyone agrees that this is so and thinks that this is what Rand was arguing for, then why didn't she dramatize this course and show how it is a pathway from the immolation of increasing government controls that leads towards freedom and prosperity? She didn't dramatize it because you can't! In Atlas Shrugged, every example of compromise was shown to undermine the person doing the compromising. In example after example Rand showed her businessmen heroes continuing on the path of virtue despite the considerable hardships place before them. Galt didn't come to them with the message that they should compromise and "play by the rules of the game." No, he explained that to maintain their dignity, honor, virtue and ultimately their freedom, they must instead stop aiding and abetting their slave masters.

Now, in the scenario of Atlas Shrugged, this required that these individuals walk away from their businesses. Today, in the US, we are not quite at that stage, so other options are still open to us. I suggest that what BB&T, Bank of America, Wells Fargo and many other institutions should be doing is standing up and loudly proclaiming to the world that they all demonstrated that it was possible to recognizing that the sub-prime mortgages and credit-default swaps could be seen to be illogical and idiotically risky and were therefore something to be avoided - which they did. Consequently their organizations are in fine financial shape and have no need to be nationalized by the government. They should be pointing out how the government was itself responsible for kick-starting this mess with its directives and pressure placed upon Freddie Mac and Fannie May, making the point that these same people responsible for the mess were the least qualified to now attempt to fix it. They should announce to the world that it is those who have demonstrated insight and sound judgment who are the one who should be relied upon to lead us out of this mess towards a better, sounder future, and that this requires that those leaders not be straight-jacketed by increased, senseless and unnecessary regulations which can only hamper them in their efforts to do what is necessary. An finally, they should all say to the government: "Thanks, but we don't need your money. We know what we are doing and if you want us to correct this mess, there is only one thing we require from you: Get out of our way!" This could be a powerful message that might shock the country and help orchestrate a cultural change in direction.

People seem to misunderstand Rand's intentions with here statements regarding businessmen "playing by the rules" or people violating another's rights in an "emergency situation". She was saying that she, as an outsider, would not morally condemn a person who acted in this manner in these situations. But witholding moral condemnation is not the same thing as advocating that these are necessarily the proper or best choices of action in these circumstances - and I suggest that they are not. Rand worshiped the heroic and tried to lead her life in a heroic manner. We can disagree with some of the specific choices that she made as being sub-optimal while still granting that she did make every effort to be the hero of her own life, even if it required her to endure hardships along the way. I have no doubt as to what choices Rand would personally make if she were in an emergency situation or were the CEO of one of the banks mentioned above. She would act just as we would imagine Roark, Rearden, Dagny or Galt to act. And this is what I look for in my quest to see the heroic enacted today in the midst of the onslaught of bad news.

Regards,
--
Jeff

(Edited by C. Jeffery Small on 10/30, 12:36pm)

Post 14

Thursday, October 30, 2008 - 12:43pm

I'm not sure how to parse out the applicable principles here, but in the case Michael mentions of the musician who take the university job, I certainly see no moral problem with anyone working at a state supported university. The state has preempted the marketplace in a legitimate function. We need educational institutions to pass on our knowledge and skills to the next generation and a person is not taking a hand-out, but rather providing a service for which they are paid. I don't see that they are supporting the state's intervention by taking the job.

I completely disagree with Michael where he says, "Rand said that it was perfectly all right to take government largess as long as you were morally opposed to it. That, of course, is hypocricy" There is a big difference between a teacher who is taking a state supported elementary school salary and advocates and votes in favor of a proposal for vouchers, and a fellow teacher who works against any form of private school.

In a mixed economy you find yourself having to make compromises, which force you to prioritize. If someone's passion is teaching children, how much should they have to pay to restrict themselves to only working for private schools? Maybe that would mean they have to move to a different part of the country, to sell their house at a loss, to work for less, to teach subjects that don't excite them, etc. Since they will earn their keep and not be taking unearned income, and since they would never advocate for government schools, and if the choices were even nearly equal in personal cost they would choose private, is it not altruistic (beyond a certain point) to give up things to stay private? In this hypothetical, it is the measure of the personal way they hold the principles in question that determines the priorities.

Should person who has worked for, say AIG, say as an office manager, now quit just because of government bailout money? What about someone who is a loan officer at a bank that sells some preferred stock to the government? And if the government continues its path towards socialism what happens when almost no corner of the economy is left without an untouched organization?

Do these work as Objectivist principles in the context of mixed economy?
1) Never advocate for or participate in programs that violate the rights of others (Like not working for the IRS - even as a clerk)
2) Never take money or benefits that are unearned. Student loans are NOT unearned as long as they are paid back.
3) Always choose a private alternative over a government alternative except when doing so would call for a sacrifice. (a sizable cost to stay private)
4) Maintain ones integrity by never appearing to support inappropriate government interventions and always acting to support that belief.

A rational egoist has to be true to his principles but those principles aren't the end to which his life is dedicated, they are the means. The context is a changing variable here. The more omnipresent the intrusions of the state, the greater the compromises that are required. It is the last item above, #4, that Jeff and I agree on and that I see as missing in many discussions - there is a real value in our character and self-esteem that need to be part of the weighing.

Post 15

Thursday, October 30, 2008 - 1:04pm

I posted my last message without having read Jeff's post above. And as is often the case with Jeff, I read what he he wrote, and found myself thinking, "Yeah, that's what I should have said."

What I wrote is correct, but it leaves out an important element - that virtue is THE engine of benevolent change in our world, and that the absence of virtue is the source of malevolent change. It is the most heroic, like Rand herself, who move the world. It may be moral for the CEO to take the funds in exchange for stock, but it would be more moral, heroic, if he called a press conference and explained why he refused to go along with a form of socialism.

And psychologically, the more heroically we live our lives, the greater is our experience of life.

Post 16

Thursday, October 30, 2008 - 1:07pm

Steve writes:

"there is a real value in our character and self-esteem that need to be part of the weighing."

Yes, I strongly agree. I would guess that I may weigh this aspect of the equation in the pursuit of happiness in one's life to a much greater degree than many other people do. Thanks Steve, for making this explicit. I don't believe that I ever identified the issue so clearly, even to myself, before reading your comments.

Regards,
--
Jeff

Post 17

Thursday, October 30, 2008 - 1:27pm

A mixed economy makes moral calculus impossible. That's Rand too.

Post 18

Friday, October 31, 2008 - 2:40am

Thanks for that rhapsody to virtue in #14, Jeff. I wish I could sanction it twice. Like, Steve, I found that you identified and explained the essentials that I should have.

Steve, thanks, also. I agree with much of what you wrote. It is a complex issue and choices must be guided by self-interest. I do not agree with all of it, however, and there we must leave it, like Francisco and Rearden or perhaps like Galt and Ragnar, who disagree about the application of principles they do agree on.

Oddly enough, Cliches of Socialism is not available online. One of them was:
"We're paying for it, so we might as well get our share."

Ayn Rand's point about railroad executives bribing state legislators is that the businessmen were buying off controls they never should have suffered in the first place. That is not the same thing as buying into controls in order to put other people's money into your pocket.

Post 19

Friday, October 31, 2008 - 3:28am