According to John Allison, Chairman and CEO of BB&T Corporation, "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."
We couldn't agree more.
Responding to the Supreme Court's decision last year in Kelo v. City of New London, Connecticut, Mr. Allison announced this week that his company, one of the largest banks in the United States, would not lend money to developers who plan to build commercial projects on land taken from private citizens through the power of eminent domain.
Back in June, a narrow majority on the Supreme Court ruled it constitutional for local governments to use eminent domain to take private property and hand it over to private developers if such a seizure would result in increased tax revenue for the government's coffers. Since then, local governments from Oakland, California to Lodi, New Jersey - and in nearly every state in between - haven't been shy about using their expanded eminent domain power. As Justice Sandra Day O'Conner wrote in her dissenting opinion, now "Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."
BB&T is the first lender in the nation to join the massive public outcry against the Kelo decision. To be sure, their decision to withhold loans from developers benefiting from the expanded eminent domain power of local and state governments is both principled and commendable. According to BB&T Chief Credit Officer Ken Chalk, the company acknowledges it will lose a small amount of business as a result of its decision. But Chalk went further in saying, "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."
Moreover, BB&T's announcement is sure to lend weight to legislation pending in Congress that would withhold federal funds from local governments that use eminent domain for "economic development." To date, CFIF activists have sent more than 50,000 letters to their representatives and senators urging passage of The Protection of Homes, Small Businesses, and Private Property Act. The House of Representatives overwhelmingly passed its version of the legislation last year, but the Senate has so far failed to act. Indeed, according to Mr. Chalk, "While we're certainly optimistic about the pending legislation, this is something we could not wait any longer to address."
"One of the most basic rights of every citizen is to keep what they own. 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," said Mr. Allison in announcing the company's decision.
He should be commended. In fact, we urge all readers of this column to do just that. Send your words of gratitude to:
We predict that BB&T's good business sense will ultimately benefit the company rather than result in loss of business. As Chip Mellor, President and General Counsel of the Institute for Justice, the organization that litigated the Kelo case, said, "As far as we're concerned, BB&T now stands for Best Bank in Town." And, it is our hope -- and that of all property owners, farmers and small business people across that country -- that BB&T's principled stand will inspire other lenders to follow suit.
January 26, 2006