Former BB&T Corp. chief executive officer John Allison didn’t get President-elect Donald Trump’s nod for Treasury secretary, but the veteran North Carolina banker says he would be interested in the top job at an agency that he has said should be abolished: the Federal Reserve.
Allison, known for his free market views and criticism of regulation, met Monday with Trump, Vice President-elect Mike Pence and others on the transition team, fueling speculation he could be named to the Treasury post. But on Wednesday the President-elect tapped former Goldman Sachs banker Steven Mnuchin as his choice for the key Cabinet position.
In an interview Wednesday with the Observer, Allison said he had believed he was under consideration for Treasury, but Trump implied Mnuchin was the leading contender during their hour-and-a-half conversation on economic policy. They discussed other positions, but Allison wouldn’t provide any specifics.
“They haven’t made me an offer, and I haven’t accepted,” said Allison, 68, who retired as BB&T CEO in 2008 but still lives in the Winston-Salem, North Carolina, area. “As I told a lot of people, I have to get my wife’s approval for whatever I did.”
One job that Allison acknowledges would be appealing is the Fed chairman role now held by Janet Yellen, who leads the U.S. central bank that controls interest rate policy and regulates banks. Trump told CNBC in May that he would most likely replace her when her term ended in February 2018.
“I won’t comment on whether we talked about it, but that would be a job I would be interested in because that’s where I think I could have some impact,” Allison said. “I don’t know that I’m a candidate. I don’t know if I could get through Congress, but I can’t say that I wouldn’t take Janet Yellen’s job because I think the Fed has done a very poor job, and I think she’s done a very poor job.”
He said he’s talked with Yellen, and she knows his thoughts about the Fed’s performance. “She and I don’t agree on a lot of stuff,” he said.
Yellen’s biggest mistake? “She is real ignorant on the regulatory impact on lending,” Allison said. “That is a huge reason for slow growth in the economy. She’s a Ph.D economist. She’s an academic. She doesn’t understand banking.”
If he had a “magic wand,” Allison said he would get rid of the Fed, but he knows that’s not likely in his lifetime. “It’s just too powerful of an organization,” he said.
I don’t know if I could get through Congress, but I can’t say that I wouldn’t take Janet Yellen’s job because I think the Fed has done a very poor job, and I think she’s done a very poor job.
Allison said he favors creating economic policy rules that would control when the Fed raises and lowers rates instead of having a “bunch of people sitting in a back room acting like the Wizard of Oz or something.”
“I think they have done a lot of damage to the economy,” he said. “I think they have been the single-biggest factor in the ups and downs we’ve had in the economy by making mistakes that I don’t think markets would have made. I think markets would go up and down, but I think the Fed has made each of the cycles bigger and worse than it would have been.”
Allison said he would gut the Dodd-Frank Wall Street Reform and Consumer Protection Act financial reform law signed by President Barack Obama in 2010 to curb the abuses that led to the financial crisis. Allison has worked with House Financial Services Chairman Jeb Hensarling (R-Texas) on proposed legislation that would provide banks an “off-ramp” from Dodd-Frank regulations if they maintain high capital levels, which provide a cushion for banks when loans go bad.
“Banks can’t afford the expense of Dodd-Frank and capital,” Allison said.
In their conversation Monday, Trump said he would like to get rid of Dodd-Frank, but “doesn’t believe it can be done,” Allison said. The president-elect backs Hensarling’s proposal but possibly with modifications, Allison said.
In his 2013 book The Financial Crisis and the Free Market Cure, Allison blamed government housing policy for the financial meltdown, although he said some banks should have been allowed to fail. He also took a shot in the book at Goldman Sachs — the former employer of the Treasury secretary nominee — saying the firm was among “crony capitalists” that seek special favors for themselves instead of advocating for limited government.
“It would be nice to have a secretary of Treasury that wasn’t from Wall Street,” said Allison, who met with Mnuchin for about 30 minutes Monday. “On the other hand, he knows Wall Street and can deal with Wall Street. He’s a good guy. He’s smart. He’s rational.”
