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Major Lending Issues Dissenting Opinion: North Carolina Financial Instituion Shuns Eminent Domain

BB&T Corp. of Winston-Salem, the nation’s ninth largest financial holding company, announced that it will not make loans to commercial developers seeking to build on property taken from private citizens by eminent domain. The new commercial lending policy was announced in January.

”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 CEO John Allison in a statement released by the company.

The announcement by BB&T follows the Supreme Court’s controversial 5-4 ruling in Kelo v. New London last June. The split court ruled that the city, through the New London Development Corporation, could condemn 15 homes and then turn them over to a private developer in order to build a mixed use commercial development. Critics contend that Kelo substantially expands the scope of eminent domain beyond traditional uses such as road ways, utilities, and rights of way to include taking private property from one private citizen and transferring it to another private citizen solely for economic development. Property rights advocates and civil libertarians assert that the high court failed to protect citizens from unconstitutional seizures of property as protected under the Fifth Amendment.

Since the decision was announced, legislation has been introduced in over 40 state legislatures to protect private property from eminent domain abuse, according to the Institute for Justice in Arlington, Virginia. Legislatures in Alabama and Texas have passed laws countering Kelo; the Ohio legislature instituted a one-year moratorium on eminent domain.

On a federal level, H.R. 4128, the Private Property Rights Protection Act of 2005, passed in the House 376-38. The bill seeks to prevent eminent domain abuse and would withhold federal funds for economic development from states and communities that seize property for purposes of economic development for two years. It also bars the federal government from seizing private property for economic development. The bill has been received by the Senate and has been referred to the Senate Judiciary Committee.

BB&T Corporation (BBT) is an S&P 500 Company with assets of $109.2 billion and more than 1,400 financial centers and is listed on the New York Stock Exchange.