The nation’s ninth-largest bank will no longer loan money to real estate developers to build on land seized from property owners through eminent domain.
“The idea that a citizen’s property can be taken by the government solely for private use is extremely misguided, in fact it’s just plain wrong,” said John Allison, chairman and chief executive at Branch Banking and Trust Company (BB&T Corporation), in a January 25 statement announcing the decision.
BB&T is based in Winston-Salem, North Carolina and operates more than 1,400 financial centers in Alabama, the Carolinas, Florida, Georgia, Indiana, Kentucky, Maryland, Tennessee, Virginia, West Virginia, and the District of Columbia.
Won’t Undermine ‘Basic Right’
“One of the most basic rights of every citizen is to keep what they own,” Allison said. “As an institution dedicated to helping our clients achieve economic success and financial security, we won’t help any entity or company that would undermine that mission and threaten the hard-earned American dream of property ownership.”
BB&T’s action comes in response to last year’s U.S. Supreme Court ruling in the case of Kelo v. New London, Conn. The Court ruled 5-4 that government may seize private property and turn it over to other property owners for private, profit-making developments. The Court declared that to be an acceptable “public purpose” because an expected ancillary benefit of private redevelopment would be more tax revenue.
Positive Response Overwhelms Bank
“I have never seen anything like this in my 17 years as a public relations executive at this bank,” said Bob Denham, senior vice president at BB&T. “The response has been overwhelming. This is just the second day since the announcement, and we have received more than 600 internal email responses from our own employees, telling us they are proud to be a member of BB&T and thankful we have taken a stand, and saying it’s good to come to work.
“We are a Southeast regional bank, yet we have heard from people in California, New Mexico, Michigan, Nevada, from all over the country,” Denham said. “They are saying either they want to buy our stock or they wish we had a bank in their area, because if we did they would put all their money with us. One person from Nevada just called to say he’s going to put $25,000 into our stock.”
In addition to telling real estate developers to look elsewhere for loans for projects involving eminent domain, BB&T is encouraging other banks to follow their lead.
“I know that John Allison has mentioned he has talked to other banks about this,” Denham said.
Denham added the bank certainly supports in spirit a growing national movement to restrict use of eminent domain for private development.
At least 38 states recently have passed or are considering bills to ban eminent domain for private development. A federal bill that would ban the use of eminent domain for private development has passed the House of Representatives. The bipartisan Private Property Rights Protection Act would revoke for two fiscal years all federal economic development financing from local governments that condemn privately owned land and transfer it to private developers, unless the land is severely blighted. (See “Americans, Left and Right, Work to Counter Kelo Decision,” Budget & Tax News, September 2005.)
“While we’re certainly optimistic about the pending legislation, this is something we could not wait any longer to address,” said Ken Chalk, BB&T’s chief credit officer, in a statement. “We’re a company where our values dictate our decision-making and operating standards. From that standpoint, this was a straightforward decision. It’s simply the right thing to do.”
Steve Stanek ([email protected]) is managing editor of Budget & Tax News.
For more information …
More information about BB&T Corporation’s eminent domain policy is available on its Web site at http://www.bbandt.com/about/media/newsreleases.asp.
The full text of the majority and dissenting opinions in Kelo is available through PolicyBot™, The Heartland Institute’s free online research database. Point your Web browser to http://www.heartland.org, click on the PolicyBot™ button, and request documents #17418 (majority), #17419 (O’Connor dissent), and #17420 (Thomas dissent).