Charlotte, N.C., faces financial predicament

CHARLOTTE, N.C. (AP) — The financial collapse has hit the city known as Wall Street South.

For years, Bank of America Corp. and Wachovia Corp. helped turn Charlotte into a financial powerhouse. Now, the big banks have thrust it into the same predicament as the real Wall Street — the city is losing thousands of jobs and an unquantifiable amount of prestige. Residents who invested heavily in the banks have seen their wealth dissipate and lifestyles change radically.

“It’s kind of sad, disheartening because the banks have been the backbone of Charlotte for so long,” said Carl Clayton, a 55-year-old retired school teacher.

The loss of so many bank jobs is causing upheaval in other industries. Consumers who have been laid off or fear being out of work are curtailing their spending, forcing restaurants and retailers to close — among them Morton’s, a high-end steakhouse, and a 15-month-old Home Depot Design Center. Even some of Charlotte’s lively night clubs have shuttered their doors.

“There’s a bit of a state of disbelief,” said Bob Morgan, president of the Charlotte Chamber of Commerce. “We are seeing things happen that no one else has contemplated before.”

Charlotte remains the nation’s second-biggest bank town by assets — second to New York, and in front of San Francisco. But, Morgan said, “we don’t know what the city is going to look like once we emerge.”

“We do know that tremendous wealth has already been lost.”

A big reason why is the amount of banking shares owned by people who have worked for Wachovia, now owned by Wells Fargo & Co., and Bank of America. Both have used their stock to compensate employees.

Bank of America’s shares have been among the hardest hit among financial companies. The company has lost more than 56 percent of its value since it closed on its acquisition of investment bank Merrill Lynch & Co. at the beginning of the year. The stock is down nearly 85 percent from a year ago.

Last year, before Wachovia was acquired by Wells Fargo, its shares had slid 85 percent.

Clayton estimates he has lost about $60,000 because of stock holdings in the two banks, along with other North Carolina banks, including BB&T Corp.

“I had a lot of bank stock, but now it’s gone,” Clayton said. “What wealth I had, is gone.”

Residents and employees never expected such a downfall. Wachovia, once headquartered in Winston-Salem, N.C., joined the Top 5 ranks of national banks after it was acquired by Charlotte-based First Union Corp. in 2001. The combined company took Wachovia’s name.