Just more business for the other banks in the region(s) affected.
On the other hand, Congress could pass legislation prohibiting all banks from making such loans. They could also prohibit selling municipal tax-free bonds for those purposes. I think if Republicans introduced such legislation, DemocRATS would have little choice but to go along with it.
Not necessarily. If I lived and banked in that area, this announcement would prompt me to demand whatever institution I currently banked at to announce the same policy, or lose my business. Lose all the business of people who feel strongly about eminent domain abuse, and you'll have to get an awful lot of developer business to make up for it. And it's virtually impossible for banks or S&Ls to be competitive in the loan market if they don't hae a strong deposit base.
I have your glass of bitters here, sir, it's half empty.