The Crash of 2008
As we look back at some of the most frightening days in Charlotte’s history, we see that the crash can’t be measured in numbers. Rather, its legacy is the anxiety it created and how we resolved to not let hard times beat us
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Fall 2013. It’s now five years after the biggest financial crash in a generation. But you wouldn’t know that walking around uptown. The cranes are gone and the glass of new office towers, hotels, and condos glimmers in their place. Charlotte’s still the second-biggest banking city in America. We don’t brag about that quite as much anymore, though. What other city makes a slogan out of such a dull statistic? Yet for a decade starting in 1997, that fact made it into countless travel brochures and promotional publications. Other cities might have culture and romance and history and grit. Charlotte has numbers. And what else matters in banking?
Chris Sager, 33, had seen those brochures and that statistic when he came to UNC Charlotte for college in 1998. They made it easy for him to choose a major. He was good with numbers, and the work was challenging enough, even if it wasn’t all that interesting. Finance was lucrative. Banking seemed safe.
He started with the tax escrow department at Wachovia in 2002. Wachovia had just absorbed First Union, and over in the tower on Tryon Street, NationsBank had acquired Bank of America a few years before that. It was the high point of a decades long arms race of mergers and acquisitions between CEOs Hugh McColl of NationsBank and Ed Crutchfield of First Union.
“Deals were being made and loans were being acquired,” Sager remembers. “Things were very good not only for Wachovia but for banks in general. Hiring new employees was never a problem.”
Charlotte had long been a banking center. It was where the textile industry kept its money in the early 20th century. And unlike many other states, North Carolina law allowed banks to open branches statewide. Regulations
prohibited interstate banking. Not satisfied with statewide banking,
McColl and then-CEO Tom Storrs of North Carolina National Bank, NationsBank’s predecessor, tested a legal loophole in 1981 by buying a Florida bank. The purchase stood up to a challenge in court, setting up the flurry of mergers and acquisitions that gave Charlotte claim to its second-largest banking center title.
What was good for banking was good for Charlotte. Just as Crutchfield and McColl had competed in the 1990s, the banks they acquired competed to raise money for Charlotte charities, community organizations, and museums. Yearly United Way campaigns became internal contests between bank departments.
And the people in those departments had deep pockets. By 2007, about 9 percent of the workforce in Mecklenburg County was in finance. But they brought home about 20 percent of the county’s private-sector wages—more than $1 billion. That money rippled through the rest of the economy—to restaurants and repairmen, grocery stores and parking garages, coffee shops and CPAs.
Don’t forget the homebuilders. Transferred executives and loan a officers and lawyers who supported the banks filled new suburban developments that sprouted on the south side and in Huntersville, Cornelius, and Matthews. And thousands of construction workers from surrounding counties and Mexico and Guatemala came to build them. The county gained 185,000 people in the 1990s, and 225,000 more between 2000 and 2010.
Around 2006, Sager began to sense that something was wrong. That’s when Wachovia started outsourcing its loan processing and customer service operations. He was still working on servicing Wachovia loans, but now his check came from a spin-off company called Zenta. And he and his co-workers spent much of their time working with teams in India who processed the loans.
But for the most part, things stayed the same until the last week of September in 2008.