By John Allison
Let me share with you some background explaining why BB&T decided not to make loans to developers for projects where eminent domain is used to take property from one private individual for the benefit of another private individual. BB&T is the 11th largest financial institution in the U.S. with $120 billion in assets. Although BB&T is a large company today, when I joined in 1971, BB&T was a small farm bank. We have maintained that personal relationship culture with our clients and community as we have grown our business. BB&T is very much a principle-driven organization. We firmly believe that, in the long term, adhering to a rational set of values is the foundation for organizational success and personal happiness.
BB&T Chairman and CEO John Allison addresses the 2006 National Castle Coalition conference.
The Supreme Court’s Kelo decision was stunning. After reading the decision, we became greatly concerned about its potential negative impact. The United States is the first country in history ever created based on a set of philosophical ideas. The world-changing concept, which the Founding Fathers expressed in the Declaration of Independence and the U.S. Constitution, is the principle of individual rights—life, liberty, property and the pursuit of happiness.
“Property rights are essential for the protection of all rights and the foundation for a free society and an economically successful one.”
Property rights are essential for the protection of all rights and the foundation for a free society and an economically successful one. If the government can control your property, take the food off your table, you have no rights. The Kelo decision potentially threatens the concept of property rights and, therefore, the long-term economic well-being of the United States. We also knew that we would be faced with decisions where we would be asked to finance projects where the power of government, i.e., the power of physical force, was going to be used to take one individual’s property and effectively give it to another private individual. We know that this is both counter to the American sense of life and bad for the U.S.’s long-term well-being.
While there have been a handful of success stories, the history of eminent domain projects is poor. It should be noted that 99 percent of commercial real estate activity in America takes place without eminent domain. Why would eminent domain be necessary if a project is legitimate? Often projects involving eminent domain also require government subsidies. If a project is economically viable, why are eminent domain and government subsidies necessary? Many “free market” real estate developers have been economically damaged by projects involving eminent domain where politically connected developers receive subsidies.
In a more fundamental sense, even if any individual project using eminent domain may be successful, the principled protection of property rights is far more important to the “public good” in the long term. In numerous economic studies, it has been unequivocally demonstrated that property rights are essential for a free society and for economic growth. I agree with Thomas Jefferson’s concept that government which governs least governs best and share with John Adams the fear of the tyranny of the majority. The Founding Fathers collectively “rolled over” in their graves when they heard the Kelo decision.
BB&T and I personally provide financial support for the Institute for Justice. It is a pleasure to congratulate IJ on its successes and the importance of its work. I also want to thank all of those who have fought heroically to defend their property. You are truly defending property rights for all of us.
John Allison is Chairman and Chief Executive Officer of BB&T Corporation.