I was interested on Wednesday afternoon to see this press release come across my desk.
BB&T Corporation today said it will not lend to commercial developers that plan to build condominiums, shopping malls and other private projects on land taken from private citizens by government entities using eminent domain.The commercial lending policy change comes in the wake of Kelo v. City of New London, a controversial Supreme Court decision in June that said governments can seize personal property to make room for private development projects.
The court’s ruling cleared the way for an expansion of eminent domain authority historically used primarily for utilities, rights of way and other public facilities.
“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 BB&T Chairman and Chief Executive Officer John Allison.
This is another interesting development in response to the Supreme Court's poor judgement. I hope other banks take BB&T's lead.
That, coupled with legislation on state and federal level, should get the message across that the court's decision infringed on people's right to own property--and the people didn't like it.
Reuters ran a story on BB&T's stand which struck me funny. As a newsman, I'd love to see a transcript of the interview.
"I view it as a pragmatic issue rather than a political statement by the bank," said Thomas Merrill, a law professor at Columbia University and eminent domain specialist."I would be nervous that the political surroundings could explode, and derail projects that look financially sound on paper," he continued. "That would create delays and uncertainties, and keep banks from getting their money back because the projects are not generating revenue."
Ken Chalk, BB&T's credit officer, in an interview said the new policy should have only an "insignificant" effect on lending volumes.
Still, he said BB&T is sympathetic to concerns about eminent domain expressed by some clients. The bank wants to show government officials its "opposition to the encroachment on private property rights," he said.
The reporter went out and got a bonified expert, who proceeded to step out of his expertise on the subject and talk about the business ramifications of the move. Merrill's point may be valid, but how about talking about the legal or eminent domain aspects?
Posted by JRC at January 27, 2006 08:27 PM | TrackBack