Excerpted with permission from the publisher, John Wiley& Sons, from Thriving in the New Economy by Lori Ann LaRocco. Copyright(c) 2010 by Lori Ann LaRocco.

Since the fall of BearStearns and LehmanBrothers, the term bankhas become a dirty word.The historic $700 billion''financial'' industry bailoutin the fall of 2008acted as the backdropfor well-known CEOs losing their jobs, and banks failing andbeing seized by the Federal Deposit Insurance Corporation(FDIC) as a common Friday occurrence. Fears of ''Is my moneysafe?'' were rampant after Wachovia and Washington Mutualfailed. Then, in order to restore confidence, the FDIC raisedthe limit of deposit insurance on U.S. bank accounts from$100,000 to $250,000 per depositor.

But during this turmoil, a part of the industry was tryingto thrive--regional banks. I remember driving in to work inthe fall of 2008 and the winter of 2009 seeing signs such as''Still Strong, Still Lending'' hanging above their doors. Oneof the regional bank chief executive officers attempting tolead through this new economy is BB&T Corporation ( BBT - Get Report) CEOKelly King.
Thriving in the New Economy

BB&T is no stranger to the conditions of the crisis we'refacing right now. In fact, the bank successfully operatedduring the Great Depression. Kelly has been with thecompany since 1972 and began his tenure as CEO inJanuary 2009 in the middle of the credit crisis. He hadserved as BB&T's chief operating officer since 2004.

I met Kelly through one of my great financial contacts,Donald Powell (who you'll be reading about a little later).Don was guest co-hosting a one-hour exclusive special on"Squawk Box" -- a regional banking summit. On the panel wasKelly King. My pre-interview with him for the show wasgreat, and I knew in my gut he would be an amazing guest.My gut is rarely wrong.

So why did I choose to include Kelly's -- and BB&T's -- story in my book, rather than other regional banks? It was ano-brainer; BB&T has adequate capital on its balance sheetfor acquisitions, meaning it is in good health and poised togrow during this time. The bank was ''asked'' to acceptTroubled Asset Relief Program (TARP) money along withthe country's other 18 largest banks and underwent thestress test. It was one of only nine that ''passed'' the testand therefore was not required to raise additional capital.After the stress test results were announced, BB&T said itwould raise $1.5 billion, along with a large dividend cut andexisting cash, to pay off the $3.1 billion it received in TARPfunding. The bank was cleared by the government to payback its TARP money and exited the Troubled Asset ReliefProgram on June 17, 2009 when it paid the U.S. Treasurywith interest.

Nearly two months later, Montgomery, Alabama-basedColonial Bank, one of BB&T's rivals, failed and was seized by the FDIC on August 14. BB&T then purchased Colonial'sloans, deposits, and most of its assets from the government.At that time, Colonial Bank was the sixth-largestbank failure in U.S. history. This acquisition gave BB&Tfurther access to the Florida and Alabama markets, whichis part of its growth strategy. The structure of the deal alsoshielded BB&T from potential losses when the FDIC agreedto share losses with BB&T on $14 billion of the $22 billionin assets included in this deal.

Although initially Kelly was shocked by the events at BearStearns and Lehman Brothers, he is optimistic on the futureof banking.

From Kelly King, BB&T CEO

I was very surprised to hear about the Bear Stearns messbecause, just a few years earlier, I had been in New Yorkand had a nice hour-long chat with ''Ace'' Greenberg, the formerchairman of the Executive Committee of The Bear Stearns Companies.We had a genuinely good discussion about our companies'similarities. My initial surprise was followed by shock when Irealized the magnitude of the subprime mess in Bear Stearns' entireglobal portfolio. The reason I was surprised is because BB&T didnot offer subprime mortgages; we were not participating in thatprofit flow. In fact, most commercial banks like us were not. Themagnitude of what was going on in the securitization market,particularly around Residential Mortgage Backed Securities(RMBS)* really astonished me.

As the Bear Stearns debacle played out, it crystallized for me whata major problem we had. If a firm of the reputation, stature, andexperience of Bear Stearns can be taken out of the game literallyovernight, there had to be some major and unusual--not to mentiondangerous--forces at play.

* Author's note: Residential Mortgage Backed Securities are securities with coming cash flowfrom residential debt. RMBS are a type of mortgage backed security.

The Call to Let Lehman Brothers Fail

It was a pretty risky step for the government to step in and subsidizethe Bear Stearns transaction, because that meant it was clearlyheading down a slippery slope in terms of expanding the ''toobig to fail'' concept.

But when the government let Lehman Brothers go, I thought itwas the right thing. Bear Stearns caught the government totally bysurprise, at least in my view. Out of shock, it's reaction was, ''Wecannot let them fail''; and so it put a deal together overnight. When itlet LehmanBrothers go, as bad as it was--and as traumatic as I thoughtit would be--I still believe that the government made the right move.What startled me, however, was when the government came rightbehind Lehman Brothers and bailed out AIG ( AIG - Get Report). It appeared as thoughthe government was flip-flopping, or picking winners and losers. Itbecame increasingly frustrating to see not only how big this problemwas but how misguided our government was in trying to deal with it.

Did the government really develop a strategic plan for dealingwith the problem? Did the government really even know how big aproblem it was? Was it honest about how large a role politics wasplaying in its decision making? (From my vantage point, it certainlylooked like politics was a big part of it.)

But one of the things I've learned after being in business for37 years is to be careful about second-guessing people who havereally hard decisions to make when I may not have all the facts. Eventhough I had real reservations about their decisions, I had respectfor former Treasury Secretary Henry Paulson and Fed ChairmanBen Bernanke, and certainly appreciated the fact that this was anextremely tumultuous situation. I gave them the benefit of the doubtand assumed there must be a lot more to it than I knew.

All of this turmoil left the market feeling very uneasy. We savedBear Stearns, let Lehman Brothers fail, and then saved AIG. So howbig is this problem and exactly how are we dealing with it? Themarket certainly didn't understand why we saved two and let onefail. It didn't understand the pervasiveness of the problem. All of thatcontributed significantly to the nervousness in the market. The crescendoof panic that started setting in gave way to an enormousliquidity scare for the next year or so.

Using History as a Guide

At BB&T, we hunkered down and tried to figure out where theindustry might be heading from here, including worst-case scenarios.Certainly, when IndyMac Federal Bank failed, and we watchedTV coverage of lines of people wrapped around the parking lotwaiting to find out where their money was, we knew a massivedepreciation in the financial services industry was a possibility.

We did not have any particular concerns about our own company.We've always tried to manage very conservatively, probably becauseof our past. As you may know, our bank is 137 years old. During theGreat Depression, BB&T in Wilson, North Carolina, was the onlybank in the Carolinas that stayed open amid all the other bankfailures and disasters of that period. So a big part of our heritage isliterally surviving a bank panic.

In fact, at the height of the Great Depression--when people werecoming in and taking out all of their money--they would go to thepost office in Wilson and convert their money into postal moneyorders. They didn't know that the post office banked with us too! Soyou had people taking their money out of our bank and going to thepost office to get a money order. Then at night, the post office wouldturn around and bring the money right back over to our bank. Itkept circulating between BB&T and the post office. And we neverclosed our doors.

Because of that heritage, we've always believed in being reallyconservative and being prepared for any major crisis. And that'sexactly what has occurred since the problems in our industry beganto unravel in 2008. When the worst of the liquidity crisis washappening, nobody would lend money to anybody. In fact, therewere organizations bringing money to us at 0 percent interest. We'dtell them we didn't need the money, and they'd reply, ''That's fine;we just want to put it in your bank.''

So other organizations viewed us as a safe haven throughout theordeal, which was of course rewarding for us. However, I continuedto worry about the financial system as a whole. Our financialsystem is based on faith, and when the American public loses faithin the financial system and the government's ability to support it,it could lead to an absolute collapse across the industry.

Lori Ann LaRocco is senior talent producer at CNBC and one of the producers of the CNBC show "Squawk Box."