Banking boomtown loses one of its biggest players. Charlotte, N.C. is the country's second largest banking center, but the recent failure of Wachovia has the entire city bracing for fallout from thousands of executive-level layoffs. NBC's Kerry Sanders reports.
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Business Leaders Debate Charlotte's Economy
The bankers and the energy boss sparred today over how long the economic recovery will take and what needs to happen to get there.
The chief executives of Bank of America and Wells Fargo, plus a top Federal Reserve Bank official, argued that the recovery was solidly underway and that, despite lingering challenges, the economy will grow next year. But Duke Energy CEO Jim Rogers was more pessimistic, saying massive government debt and officials' tendency to put their “heads in the sand,” could mean a slow rebound.
“I think the recovery, at best, is probably very anemic,” he said.
The debate was part of the Charlotte Chamber's annual Economic Outlook Conference, held at the convention center uptown. It was likely Bank of America CEO Ken Lewis' last public appearance before his year-end retirement, and the crowd responded with a long standing ovation as he took the stage.
Lewis said Charlotte's Unemployment Rate has probably peaked but that it could remain around 10 percent through next year. He expects the stock market and housing market to improve next year, though, he said.
Jeffrey Lacker, president of the Federal Reserve district that includes the Carolinas, said consumer spending on big-ticket items such as cars and houses was recovering. He cited major challenges in the months ahead – particularly the weak job market – but said next year looks better.
“Putting the whole picture together, I believe … the economy will grow at a reasonably healthy pace next year,” Lacker said.
Wells Fargo CEO John Stumpf acknowledged that “it doesn't feel pretty good on Main Street these days,” adding that jobs were the most important element to the recovery.
But he promised that banks are lending all the money they can, and he said Charlotte would benefit from its geographic location, entrepreneurial spirit and talented workforce.
“Your future, and I would say our future, is very bright,” he said.
The economy is resilient, Rogers said, but “what we have had an incredible ability to do is put our heads in the sand,” he said. “… That will make that historical resilience difficult to achieve.”
The bankers admitted that Rogers' scenario is a possibility.
“We have been optimistic to a fault” in predictions in years past, Lewis said. “Given the track record for us, I can't argue against him.”
BofA's next chief could be based in New York
Bank of America Corp. broadened its search for a chief executive officer to include candidates who want to live in New York, acknowledging the bank's biggest units are no longer based in Charlotte, people familiar with the matter said.
The board - led by Chairman Walter Massey - is also concerned there may not be a deep enough pool of qualified candidates willing to move to Charlotte, 400 miles south of Washington, the people said, speaking anonymously because the search is private.
CEO Ken Lewis, who is stepping down at year's end, has said Charlotte will remain headquarters as long as he's in charge.
"It does reflect well on the board that they're not going to let the headquarters location limit their selection in terms of CEOs," said Thomas Brown, CEO of New York-based hedge fund Second Curve Capital. "There aren't too many people around the world who think that Charlotte is a major financial center."
Five board members with ties to Charlotte have stepped down during the past two years, and none of their replacements lives in the city, the state's largest. New directors live in Alabama, Delaware, New York, Ohio, Texas and Virginia. Lewis, 62, is the only N.C. resident.
Former Bank of America CEO Hugh McColl Jr. told a Charlotte group on Oct. 22 that it's unclear whether the next CEO will be based in the city, according to four people who heard his comments at the meeting sponsored by Queens University of Charlotte.
McColl engineered the 1998 acquisition of San Francisco-based BankAmerica Corp., stipulating Charlotte's role as headquarters. He emphasized that he no longer influences the board's decision-making, according to the people who heard his comments. McColl didn't return telephone calls seeking comment.
Bank of America's investment banking and wealth-management businesses, which are run from New York, made up half of revenue through Sept. 30. That's up from 34 percent in the same period last year, before the acquisition of Merrill Lynch & Co.
"With Merrill Lynch being such a big part of the ball game, the CEO probably ought to be in New York," said Arnold Danielson, chairman of Danielson & Associates, an investment banking firm in Bethesda, Maryland.
The home loans and insurance unit - which account for 14 percent of revenue - is based in the former Calabasas, Calif., headquarters of Countrywide Financial Corp., which the bank acquired in 2008. The credit card services unit makes up 23 percent of revenue and is based in Wilmington.
The consumer-banking business under Brian Moynihan in Boston made up 11 percent of revenue. All told, that means about 98 percent of the bank's revenue comes from units headed by executives based outside Charlotte.
"We aren't going to comment on speculation on the process," bank spokesman Jerry Dubrowski said.
Massey leads a search committee of six directors, three of whom joined the board upon the FleetBoston acquisition.
"Some of the Fleet members have no allegiance to Charlotte," Brown said.
Charlotte was home to two of the four biggest U.S. banks until San Francisco-based Wells Fargo & Co. bought Charlotte-based Wachovia Corp. in an October 2008 sale brokered by government regulators.
Bank of America employs 15,000 people in its hometown, said Bob Morgan, president of the Charlotte Chamber, a group that promotes local business interests. That's about 5 percent of the bank's global workforce of 281,863. Wells Fargo has about 19,000 employees in the city after cutting about 2,000 jobs there during the past year, Morgan said.
New Yorkers contacted about the job include Charles Scharf, retail banking head at New York-based JPMorgan Chase & Co., a person familiar with the matter said. Robert Kelly, CEO of Bank of New York Mellon Corp. and a former Wachovia chief financial officer, "has said he has no interest in the job," spokesman Kevin Heine said Tuesday.
Tough times will require Anthony Foxx to find new solutions
And so a new era begins. After 14 years with Republican Mayor Pat McCrory at the wheel, Charlotte will see a new approach in the person of Democrat Anthony Foxx.
We have said from the beginning that Charlotte was fortunate to have two good choices for mayor this year in Foxx and Republican John Lassiter. That's been proven true, and we believe Foxx will perform admirably.
Foxx, 38, is intelligent and hard-working. He also has shown an ability to address shortcomings. Over the course of the campaign, he went from an unpolished candidate inconsistent about articulating a clear message to one who both delved into issues and communicated his stances on those issues effectively.
Foxx, we expect, will be an inclusive mayor who listens to arguments from all sides, all constituents, all City Council members. Foxx has said he will treat the office as a full-time job. He'll run the City Council meetings and work closely with staff on all the issues facing the city. But he'll also use the office as a bully pulpit, calling attention to issues that need it and working with regional, state and federal governments to fight for Charlotte's interests in a collaborative way.
We're confident he will work hard to connect with residents, including by holding regular town halls he promised during the campaign. We believe he will be open-minded about looking for new ways to approach intransigent problems.
We have many hopes for Foxx's tenure. We hope he governs from the heart, not from the polls. We expect him to stand up to his Democratic colleagues on the City Council when needed. With an 8-3 majority, council Democrats could safely ignore the concerns of Republicans if Foxx lets them. We would like to see him fulfill his promise to scour the city budget for areas where spending could be reduced responsibly, knowing that a tax increase on citizens already hurting in a slow economy is not an attractive option. We hope he makes homelessness and affordable housing a truly high priority for the city.
But most of all, we hope he will strive to approach the city's challenges in a new way. These are difficult times, particularly for Charlotte, and will continue to be well into the new year. Foxx faces an entirely different challenge navigating the city out of this slowdown than McCrory did leading Charlotte through 14 years of prosperity. He'll have to avoid the temptation to bring old solutions to new problems, and instead find ways to truly innovate.
We applaud both candidates for the clean, informative campaigns they ran. Lassiter, 55, has loyally served Charlotte and Mecklenburg County for two decades, and we strongly urge him to remain engaged in public life and in this city's future. This loss must be extremely disappointing, but his talents are considerable and Charlotte needs leaders like him in public office.
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Sources: McClatchy Newspapers, Charlotte Observer, MSNBC, Wikipedia, Google Maps
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