BB&T, the nation's ninth-largest financial holding company, announced yesterday that it would deny loans to developers building shopping malls and other private projects on land acquired 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," John A. Allison, the chairman and chief executive of the bank, said in a statement. Based in Winston-Salem, N.C., BB&T has more than 1,400 branches, mainly in the Southeast.
BB&T is believed to be the first bank to have made public such a policy in the wake of a Supreme Court ruling last June that set off a firestorm across the nation and led to bills in Congress and in more than two dozen states. The decision upheld the right of officials in New London, Conn., to condemn homes and businesses to increase the tax base of one of the state's poorest cities.
W. Kendall Chalk, an officer for the bank, described the move in a telephone interview as more a matter of principle than a decision with practical consequences for the bank. He said the bank recently turned down a loan for a private project that would have involved the forced sale of unoccupied land but that such loan requests had been rare.
"Historically, eminent domain has been used very judiciously in the states in which we operate," he said, adding that its use had generally been limited to roads and other public-works projects. He said the bank did not operate in Louisiana, where eminent domain is likely to be used in the rebuilding of New Orleans.
But in the bank's view, Mr. Chalk said, the Supreme Court "opened the door wider," making broader use of condemnation powers more likely. "We thought it was just timely to let people know how we feel," he said. "We are a very values-driven, principled organization."
Officials at the Institute for Justice, a property-rights group based in Arlington, Va., that has led the fight against eminent domain, welcomed the announcement but said it came as a surprise.
"It's going to set an example and encourage other banks and hopefully developers to say they will not take advantage of the government's power of eminent domain to force people out of their homes and businesses," said Dana Berliner. "It's the right thing to do, and it also makes sense as a business decision. These projects are so wildly unpopular, they're going to encounter political opposition and maybe litigation, and they often don't work anyway."
But Maureen L. McAvey, a senior fellow at the Urban Land Institute, a developers' organization based in Washington, said that it was odd that a bank would not want to judge each case on its merits to see if the forced sale of property was justified.
"It's curious that a major financial institution would choose to be both judge and jury," she said. "Many projects that use eminent domain are very important for the entire community."
The New York Times Company used eminent domain to acquire the land for its new headquarters under construction in Midtown.
Why am I not surprised.