Wachovia Falls: Banking's 2008 Charlotte Story

Charlotte's banking story is usually told as a triumph, the story of Hugh McColl and Bank of America transforming a mid-sized Southern city into a global financial capital. But there is a second banking story, one that ends in the wreckage of the two thousand eight financial crisis.

First Union Corporation was founded in Charlotte in nineteen oh eight as a small bank in a hotel lobby. It grew steadily through the twentieth century into the Southeast's second-largest banking institution, headquartered directly across Tryon Street from NCNB and NationsBank, its great rival. The two banks defined Charlotte's banking culture as a competition between adjacent giants.

In two thousand one, First Union merged with Wachovia Corporation of Winston-Salem, creating the nation's fourth-largest bank with approximately three hundred twenty-four billion dollars in assets. The merged bank took the Wachovia name and kept headquarters in Charlotte. The merger looked like consolidation and strength.

Then came the Golden West acquisition. In two thousand six, Wachovia paid about twenty-five billion dollars for Golden West Financial, a California mortgage company whose portfolio was concentrated in adjustable-rate home loans. When the housing market collapsed in two thousand seven and two thousand eight, Golden West's loans began defaulting in catastrophic quantities.

Wachovia, suddenly insolvent, became one of the largest bank failures in American history. Wells Fargo purchased the remnants in October two thousand eight for approximately fifteen billion dollars. The Wachovia name was retired. The Charlotte headquarters became a Wells Fargo regional office.

Two of Charlotte's four largest financial institutions collapsed in or near the two thousand eight crisis. The city that had become the second banking capital of the United States discovered, like the rest of the country, that the financial architecture of the early two thousands was built on foundations that could not hold.