- The Washington Times - Thursday, March 9, 2006

WINSTON-SALEM, N.C. — n its face, it appeared an odd decision for a banker, to turn down business on a principle that most people don’t think much about.

And so far, the banking giants haven’t seen fit to follow the lead of BB&T; Corp.’s John A. Allison IV, who declared in January that the nation’s ninth-largest bank would no longer make loans to developers who planned to build commercial projects on land seized from private citizens through the power of eminent domain.

“We happen to believe in the fundamental concept of individual rights, and one of those is property rights,” Mr. Allison said. “If that is jeopardized, our entire financial system is also in jeopardy.”

The prospect of losing out on a few loans, or taking a stand alone, hasn’t shaken Mr. Allison’s resolve, and has only added to his reputation as a banker whose thoughts routinely stray to the philosophical.

Colleagues probably should have seen it coming from an executive known to quote Aristotle during board meetings.

“John is a student,” said Dick Janeway, the retired head of Wake Forest University’s medical school, who served as a board member at Winston-Salem-based BB&T; for years. “He’s a living example of continuing education.”

While often overlooked in a state that’s home to the nation’s second- and fourth-largest banks — Charlotte-based Bank of America Corp. and Wachovia Corp. — BB&T; has grown from its 1872 founding in rural Wilson into a bank with $109 billion in assets and 1,400 branches in 11 states and Washington, D.C.

Mr. Allison, 57, has led the firm as chairman and chief executive officer since 1989.

“I just celebrated my 35th year with the bank,” he said during a recent interview with the Associated Press. “I made a lot of loans in eastern North Carolina to farmers and I can remember praying some years for it to rain more and others for it to rain less.”

Such low-profile loans and BB&T;’s focus on consumer banking had long kept it in the shadow of the bigger banks. Then came last year’s decision of the U.S. Supreme Court, which ruled 5-4 that a local government in Connecticut had the power to seize private property for a private development project. A few months later, Mr. Allison said publicly that his bank would forgo any business connected to such taking of private land.

Charles Moyer, dean of the business school at the University of Louisville. “The potential for abuse is great and someone needs to stand up for it. I was not surprised it was John and BB&T.;”

Mr. Allison is an executive who mixes in re-readings of the works of Thomas Aquinas and John Locke into a book-a-month habit. “My absolute favorite writer is Ayn Rand,” he said of the Russian-American philosopher and advocate of capitalism. His reasoning against eminent domain is based in part on a strong belief in property rights, one of Locke’s cornerstone values, and one shared by the farmers in rural North Carolina.

“To these people, property rights are the single most important thing,” he said. “It’s the basis of economic freedom in this country, so they take it very seriously.”

Slipping into the role of college professor, a job for which Mr. Janeway said he’d be well suited, Mr. Allison asks rhetorically why there is a need to use the power of government to force people from their homes. The answer sounds like one that would please a banker focused on shareholder value and the next quarter’s results, but that doesn’t hold sway with Mr. Allison.

“They really want to use it as lever to drive down the price,” he said, adding that there have already been abuses of eminent domain rules, with the victims mostly among the poor, minorities and the elderly.

Mr. Allison’s critics argue he is exaggerating a problem that doesn’t exist. BB&T; concedes it won’t lose much business — a fraction of a percent, one of Mr. Allison’s deputies has said. And so far, none of BB&T;’s competitors has joined Mr. Allison’s stand, even as efforts are under way in about 40 states and in Congress to outlaw the practice.

“Normally, eminent domain does not even come into play until after a huge public process,” said Maureen McAvey, a senior fellow at the Urban Land Institute. “The truth of the matter is that it is used as a last resort. No one wants to go through all the damage.”

But even if BB&T; isn’t losing any business, the Supreme Court decision gave Mr. Allison another opportunity to proselytize about his beliefs. The bank’s charitable foundation has made large donations to universities, including a $1 million gift to Duke University, to fund student studies of capitalism.

“Most people realize that capitalism is a great system for achieving productivity, but a lot of people also seem to think it also has an immoral side to it,” he said. “We happen to believe it’s a direct result of freedom and we wanted to encourage colleges to look at it.”

The decision to forgo business generated by eminent domain has the same objective, said Tony Plath, a finance professor at the University of North Carolina at Charlotte.

“What he is doing here is using a private enterprise to defend capitalism,” he said. “It’s not like he’s issuing a policy to protect the environment or save the whales. Those are issues that are not necessarily in the interest of shareholders.”

It’s about getting people to think, Mr. Allison said, something he wants from all of the 28,000 employees of BB&T.;

“I strongly encourage all of our employees to have an active mind,” he said. “I’m not talking about their IQs. I want them to pursue their interests and spend time with their families.”

And he’s no exception.

“I work very hard, but I’m protective about my weekends,” he said. “And I do take my vacations.”

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