On March 11, Barclays Capital took out a full-page ad in the front section of the Wall Street Journal to declare that it is “proud” to celebrate the groundbreaking for the new Barclays Center in the Prospect Heights section of Brooklyn. If Barclays had even a modicum of respect for private property rights and the free market, it would be deeply ashamed.
The future home of the NBA laughing-stock Nets will soon be the former home of proud Brooklyners. These folks are losing their homes and businesses through eminent domain for a basketball court and other private development projects of billionaire developer Bruce Ratner.
Ratner did not have much difficulty courting virtually the entire New York political establishment to his side. All he had to do was claim that a sports arena and luxury residences would generate more tax revenue than neighborhood pubs and modest condos. With the promise of extra taxes, officials became all too eager to declare this up-and-coming neighborhood “blighted” and condemn the properties on Ratner’s behalf. Ratner also succeeded in hiring the scandal-ridden ACORN to provide political cover for the development project by loaning the group $1 million and giving it $500,000 outright. And because the Nets have been hemorrhaging money, Ratner also partnered with Mikhail Prokhorov, the unscrupulous billionaire Russian playboy, who now owns a share in the Nets and in the arena.
Is this what Barclays meant by the “teamwork and excellence” mentioned in its ad?
On the other side of Team Ratner is a group of home and small business owners. Daniel Goldstein was a graphic designer before Ratner targeted his condo for the center court of the new Nets arena. Now, his full-time job is fighting a losing battle against the state in an effort to stay in his rightful home.
New York is perhaps the worst abuser of eminent domain in the nation and, so far, New York courts have rejected the claims of Goldstein and his neighbors fighting eviction, clearing the way for the groundbreaking heralded by Barclays. In the final days before Goldstein is removed from his home, he now even has to ask Ratner for permission before having guests over. “I actually don’t feel like I live in New York City or a free country anymore,” he recently said.
It is a pity that Barclays and other banks do not follow the example of North Carolina-based BB&T.
Following the U.S. Supreme Court’s disastrous decision in Kelo v. City of New London, which upheld the use of eminent domain for economic development, BB&T announced that it would not support eminent domain abuse and promised not to lend to private developers who used eminent domain to acquire land for their projects. John Allison, the company’s then-chairman, stated: “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.”
Perhaps Barclays believes it is doing what is necessary to help its bottom line. But despite BB&T’s stand not to invest in public-private partnerships that abuse eminent domain, it is doing just fine. Last year, in the midst of the largest financial collapse since the Great Depression, the bank added more than 300 branches and it is the tenth largest commercial bank in the United States.
Leaving aside whether these decisions make economic sense, Barclays should realize that, by forsaking the sanctity of private property rights, it is undermining the very principles upon which it can thrive — indeed, even survive — as a private institution. Right now, the politicians and power brokers are on its side. If the political winds should change, though, and Barclays should find itself on the other side of a property rights battle, it might very well finally understand what happens when you weaken the very foundations of a free and prosperous society.