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Paul Ryan, BB&T 'Shrugged' Off Banking Bailout: Street Whispers

NEW YORK (TheStreet) -- Mitt Romney's selection of Paul Ryan (R-Wis.) is sure to bring discussion of Ayn Rand's writings and philosophy to the forefront of the presidential election, but the novelist's writings are nothing new to the private sector.

Rand's novel, "Atlas Shrugged," has been cited by Ryan -- the Chairman of the House Budget Committee -- as an inspiration for his study of economics, and his fight to shrink the scope of the federal government.

There are many business leaders who also push Rand's "Objectivism" philosophy, including former BB&T (BBT) CEO John Allison, who retired from the Winston-Salem, N.C., bank at the end of 2008, just after BB&T received $3.1 billion in federal bailout assistance through the Troubled Assets Relief Program, or TARP.

Despite the fact that tenets of Rand's objectivist philosophy eschews government involvement in private markets, both Ryan and BB&T have been able to rationalize the 2009 banking bailout.

Allison later said that BB&T was forced to take the money, with Federal Reserve Chairman Ben Bernanke using "intense regulatory pressure, to encourage all the $100 billion and over institutions to participate," in order for the Fed to avoid just bailing out "three large financial institutions that were under stress."

Former Treasury Secretary Henry Paulson told the CEOs of the first nine banks to receive TARP assistance -- which included Bank of America (BAC), Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC), Goldman Sachs (GS) and Morgan Stanley (MS) -- in October 2008 that they would be forced to take the money if they didn't agree

BB&T received its TARP assistance November 2008 and fully repaid TARP in June 2009.

The Democrats will be sure to pounce on the Ayn Rand connection as they continue to instill fear of Romney's candidacy and Ryan's ideas for trimming the federal budget.

Ryan actually voted to approve TARP, and explained in an interview with the Daily Caller in February 2010 that "we were on the cusp of a deflationary spiral which would have created a Depression," and that "if we would have allowed that to happen, I think we would have had a big government agenda sweeping through this country so fast that we wouldn't have recovered from it. So in order to prevent a Depression and a complete evisceration of the free market system we have, I think it was necessary. It wasn't a fun vote."

Allison has worked through the BB&T Charitable Foundation to provide grants to schools that agree to create courses on capitalism that feature the study of "Atlas Shrugged." The former BB&T CEO also sits on the board of directors of the Ayn Rand Institute, which "works to introduce young people to Ayn Rand's novels, to support scholarship and research based on her ideas, and to promote the principles of reason, rational self-interest, individual rights and laissez-faire capitalism to the widest possible audience."

Now that the 2012 presidential campaign is in full swing, voters will not only be considering a detailed discussion of specific remedies for a runaway national debt, they will be choosing between two very different philosophies.

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Stock quotes in this article: BBT 
Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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