Tar Heel Tattler - March 2006
BB&T has low view of high court's ruling
Looking back, what made BB&T Corp.’s highly publicized stand against eminent domain unusual was that the Winston-Salem-based bank took a stand at all. Banks usually don’t. A Wachovia spokesman says that bank doesn’t comment on loan policy. A Bank of America flack says it doesn’t have a policy on eminent domain.
That’s why many were surprised when BB&T CEO John Allison announced out of the blue that the bank would not lend money to developers that used government’s power of eminent domain to seize a homeplace to build a Taco Bell or replace a Motel 6 with a Ritz-Carlton. Maybe they shouldn’t have been. Allison often seems as interested in philosophy and principle as in principal and interest. “The idea that a citizen’s property can be taken by the government solely for private use is extremely misguided,” he says.
BB&T’s action stems from a 2005 U.S. Supreme Court ruling that allows local governments to seize property for private developments that serve a public purpose. That could be creating fast-food jobs or simply paying more property taxes. The case involved a Connecticut town that condemned a neighborhood to make way for a hotel, condos and offices.
“Surprised? Absolutely not, not with John Allison,” says Paul Stock, executive vice president of the North Carolina Bankers Association in Raleigh. Stock says a few banks expressed opposition to North Carolina’s lottery, but other than that, most turn tail — closed-door lobbying is a different matter — when hot potatoes come along.
No one doubts Allison’s sincerity. In August, the bank’s charitable foundation gave UNC Charlotte $1 million to study the moral foundations of free enterprise. But opposition to eminent domain is in many ways the equivalent of lining up on the side of motherhood — a pretty safe position. Ken Chalk, BB&T’s chief credit officer, acknowledges that North Carolina doesn’t allow condemnations like the one in Connecticut. Nor do most of the 10 other states where BB&T operates. Most use it only for roads, schools and similar public purposes.
Chalk concedes that the bank’s loans to developers involved in eminent-domain projects are next to nil. “It would be very, very insignificant. We do a lot of business with small businesses, and property rights are one of the things we hear a lot about. If we took a poll, I’ve got a feeling our client base would be in agreement.”