North Carolina-based BB&T, the ninth-largest bank in the country, has announced that it won’t provide financing for private development that takes place on land that the government has seized through eminent domain. In case you’re not familiar with the concept of eminent domain, it refers to the power of the government to seize property for its own use without the owner’s consent.
Eminent domain is most often invoked to make various public works (such as building a road or a school) possible in the event that the owner of a critical piece of property refuses to negotiate a sale price. In such cases, the property owners are typically paid fair market value for their property (so-called ‘just compensation’). This past summer, however, controversy over eminent domain fired up this past summer when the Supreme Court ruled that the government can seize property for the sake of private development projects. Thus, the government could conceivably force you to sell your property such that it can be sold to a developer that will build pricier houses, offices, etc. The end result is higher property taxes for the government — talk about a conflict of interest!
BB&T’s decision isn’t likely to have major economic repercussions, as only a small fraction of lending opportunities are affected. But it’s still good to see someone (besides the affected property owners) taking a stand.