FAIRFAX,Va. - We all remember last year's despicable U.S. Supreme Court's 5-4 Kelo v. City of New London, Conn. decision that held as constitutional that the property of one person can be taken and transferred to another person so long as some public purpose is served.
The Fifth Amendment to the U.S. Constitution states, "Nor shall private property be taken for public use, without just compensation." The key term is "public use," not "public purpose." That means that the powers of eminent domain can be used only to take property, with just compensation, to build public projects such as roads, forts or schools.
City of New London officials used the law of eminent domain to condemn the property of 15 homeowners and transfer it to private developers to build a luxury hotel, high-rent condominiums and office buildings. The city justified its actions by saying that taking the property away from the homeowners, and replacing it with a hotel, condos and office buildings, would generate jobs and more tax revenue.
In a scathing dissent, Justice Sandra Day O'Connor said, "The specter of condemnation hangs over all property. Nothing is to prevent the state from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory."
In other words, government officials can take your private property and transfer it to another private person, based on any flimsy claim that it will serve a better public purpose such as job creation and greater tax revenues.
This kind of government tyranny should be disavowed by every decent American. Branch Banking and Trust Company (BB&T), headquartered in Winston-Salem N.C.), announced that it will not lend to commercial developers that plan to build condominiums, shopping malls and other private projects on land taken from private citizens by government entities using eminent domain.
On behalf of its board of directors, Chairman and Chief Executive Officer John Allison explained, "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."
Allison added, "One of the most basic rights of every citizen is to keep what he owns. As an institution dedicated to helping our clients achieve economic success and financial security, we won't help any entity or company that would undermine that mission and threaten the hard-earned American dream of property ownership."
We all should applaud the directors and officers of BB&T for their courage. While boards of directors have a duty to maximize shareholder value, BB&T has shown that maximizing shareholder value is not solely a monetary phenomenon but has a moral component as well. As such it has chosen not to be accessories to last year's despicable U.S. Supreme Court decision.
BB&T directors have set the example for other financial institutions. It would make my day if the boards of directors of other financial institutions followed suit. If they don't, shareholders could supply them with a bit of backbone at annual meetings with a shareholder initiative that not lending to developers that have acquired private property through eminent domain law becomes corporate policy.
Congress has responded to the Kelo decision with the bipartisan private Property Rights Protection Act of 2005 that "prohibits any state or political subdivision from exercising its power of eminent domain for economic development if that state or political subdivision receives federal economic development funds during the fiscal year."
This measure demonstrates Congress's lack of courage. Why not start impeachment proceedings against justices who flagrantly violate their oath of office to uphold and defend the Constitution?
[Williams has served on the faculty of George Mason University in Fairfax, Va., as John M. Olin Distinguished Professor Economics, since 1980.]
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