January 26, 2006
Eminent Domain, Kelo, BB&T and CSR
Posted by Christine Hurt

Apropos of our ongoing Kelo discussion (see comments), Branch, Banking & Trust (BB&T)announced yesterday that it would not lend its financial power to developers building monuments to commercial taxation at the expense of residential landowners.  (Tip to Tyler Cowen at VC).  Specifically, the bank will not loan money to finance private projects on land that was taken from homeowners by eminent doman.  The bank's CEO and chairman stated:

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.

As others discuss whether Google's vow to protect its users against the government subpoena power is profit-sacrificing social responsibility, profit-seeking/brand-strengthening social responsibility, or expensive folly, I ponder the same questions about this move by BB&T.  These questions are answered in the Law.com article.  Although BB&T is the ninth largest bank, its customer base is almost entirely consumers.  The chief credit officer proudly admits that this new policy will not reduce revenues by even a "fraction of a percent."  In addition, Tom Merrill (Law - Columbia) is quoted as saying that banks will ultimately benefit by not loaning money for projects that may be held up for years in litigation and protests from anti-Kelo advocates.

So, it sounds like BB&T's strategy falls into the "profit-seeking social responsibility" category.

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