Charlotte withstands shaky week on Wall Street
Posted September 19, 2008 6:27 p.m. EDT
Updated September 19, 2008 6:59 p.m. EDT
Charlotte, N.C. — The tremors on Wall Street this week, as the meltdown of top investment banks and a major insurer sent the stock market spinning, could be felt hundreds of miles away in Charlotte.
The Queen City is the nation's second-largest financial services center, home to Bank of America and Wachovia. Analysts have estimated 20 percent of the state economy is driven by financial services, insurance and real estate.
"This is clearly unprecedented. We've never seen a crisis this broadly based," said Mark Vitner, senior economist at Wachovia.
A government plan to rescue banks from billions in bad mortgage loans and other debts calmed market jitters Friday, but Rick Rothacker, the banking reporter for the Charlotte Observer newspaper said the city was still tense.
Financial institutions account for most skyscrapers in Charlotte, as well as a flurry of downtown development. Despite the recent troubles, Wachovia is building a 50-story office building downtown.
"Everyone we talk to still can't believe what's going on," Rothacker said. "There's still a lot of uncertainty."
John Connaughton, an economist at the University of North Carolina-Charlotte, said the rescue came late but did avert a financial disaster.
"For the entire financial system, the worst is over," Connaughton said. "The really good news for North Carolina is that most of our banking is retail banking. It's the strongest part of the industry, and it's going to emerge as the strongest going forward."
Still, Bank of America acquired brokerage Merrill Lynch, and Wachovia has been in talks to take over investment bank Morgan Stanley.
Vitner said shoring up the banks doesn't cure all of the nation's economic woes, citing challenges with the ongoing housing slump, unemployment and high energy prices.
"I don't think we'll be singing 'Happy Days are Here (Again)' anytime soon," he said. "(But) I think we're going to come out of this far better than New York."