Allison is retiring in December after 19 years leading BB&T, the 14th-biggest U.S. commercial bank, with assets of $136.5 billion. BB&T avoided subprime lending, option adjustable-rate mortgages and complex debt securities that have slammed Wachovia Corp., Washington Mutual Inc. and other lenders.
Still, BB&T more than tripled the money it set aside for loan losses in the second quarter, mainly because of loans to builders and developers in Georgia, Florida and the Washington, D.C., metropolitan area.
Rather than buying distressed assets, the U.S. government could offer a ``significant'' tax credit for home purchases, or even purchase vacant lots or houses under construction, Allison said. The market should be allowed to eliminate ``irrational competitors,'' he said.
``There were a number of poorly managed institutions and poorly made financial decisions during the real estate boom,'' Allison wrote. ``It is important that any rules post-`rescue' punish the poorly run institutions and not punish the well-run companies.''
`The Treasury has a number of smart individuals, including Hank Paulson,'' Allison wrote. ``However, Treasury is totally dominated by Wall Street investment bankers. They do not have knowledge of the commercial banking industry.''
Goldman and Morgan Stanley, both based in New York, said this week they are converting to bank holding companies. Morgan Stanley has taken $15.7 billion of writedowns and losses on mortgage-related securities and other types of loans since the credit crunch started last year. Goldman's tally stands at about $4.9 billion.