Wachovia Updated…
October 1st, 2008 Categories: Charlotte News and Politics, Real Estate News
Charlotte NC| Wachovia Questions…
How many jobs? Speaking to Dr John Connaughton yesterday, the UNCC Professor of Economics who keeps his eye on the Charlotte economy, about 25% of Wachovia’s work force, or 5000 people will lose their jobs in the takeover–with as many as another 2500 in the companies who do business with Wachovia .
Quite probably 7500 jobs lost, but in perspective, “less than 1% of the area work force,” according to Connaughton.
Why Wachovia, and Why Now? It appears that once WAMU failed, Washington Mutual, the FDIC moved aggressively, and must have told a few people they were coming to Charlotte this past weekend… it appears word got out last Friday, the reason for the dramatic Wachovia stock price drop Friday, and the Feds were in to takeover/ or arrange the sale of the insolvent retail division. It is interesting that Citi guarantees the first42B of bad assets, while the FDIC has about 45B on hand, and Citi will get 10 to 15B back in the bail out for the bad assets, making the purchase price of Wahcovia a steal- $2B in cash, a net of 30B+/- in paying bad loans, and if it gets no worse, (42B bad out of 122B portfolio) they get all the branches , all the clients, and are instantly the 3rd largest bank in the US.
The Wachovia Cultural Center–It’s Future?
One thing we now know, that downtown office space has become more plentiful… The tightest market in any downtown in the nation, Charlotte’s Center City, or Uptown, has enjoyed the lowest vacancy rates in the nation for the last 2 years, under 2%, lower than Manhattan’s. The office building itself is secured, I’m working to check the status on the other buildings. The open Class A space is an opportunity to attract another hi-flying company to Charlotte.
The Case for Keeping the Jobs Here
In a joint statement from the Chamber of Commerce… “that all jobs should be retained here because the case for Charlotte is a strong one…” “The case is simple. We offer a labor force that is skilled in banking. We offer a cost of living that is 94 percent of the national average. And we offer attractive and affordable commercial real estate that is currently occupied by Wachovia or under construction. In addition, the Charlotte region has a transportation infrastructure and quality of life second to none. … And with Bank of America’s recent purchase of Merrill Lynch, we remain the second-largest banking center in the United States, behind New York City and ahead of San Francisco.”
Why?
from Bloomberg.com
“The collapse of Seattle-based Washington Mutual heightened concern about Wachovia’s $122 billion of option ARMs, according to Sean Ryan, an analyst at Sterne Agee & Leach Inc. in New York.”The liquidity crunch is pushing a lot of banks to basically face credit issues faster than they otherwise might have,” said Ryan. “When it became obvious that Wachovia would have a difficult time justifying the value of their option ARMs, it became clear that their tangible equity could potentially be wiped out.”
and in an email to employees, from Bob Steel,
“our challenges have primarily been a function of a single bad class of assets, the current environment and the unprecedented events of the past 10 weeks.”
$122B in Bad Assets - WOW. But, Citi sent 200 folks in to study Wachovia books to make the deal, and the$42B they have to cover, appears to be a sound number, a researched one.
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From Fortune Magazine, and the Fortune 500, Charlotte loses one in Wachovia, now we have 6 Fortune 500 companies headquartered here… still tied or ahead of Los Angeles, San Francisco, Ft Worth, San Antonio, Richmond, Tampa, Miami, and Atlanta. Here for the full list
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So we, all of Charlotte, took a hit in the stomach… it’s time to stand up and get back to work. Charlotte hasn’t gotten to where it is simply by enjoying the good times. The recession that’s coming to the nation will visit here as well- for the first time in 2 decades, but it will be shorter, and not as deep. Time for Charlotte to step up and lead, work throught the slow times, and then add another major company move or two, and get back up.
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It is a strong buyers market here in the greater Charlotte area, Lake Wylie, Lake Norman, the whole area for new homes and re-sales.
Moving to Charlotte?
Have Questions? I am a Charlotte broker specializing in relocations, 2nd homes–buying and selling real estate of all kinds- and will represent only you. We work with Buyers and Sellers every day. You can quickly compare area prices with the map-based Charlotte home search below. Another good place to start is my fact-filled and well received Introduction to Charlotte Video (nearly 8000 You Tube views, 22 reviews) and don’t miss the FAQ videos in the right column (just under the Introduction to Charlotte Video Screen)
If it’s between the hours of 8 AM to 8 PM, EDT, please don’ t hesitate to call me direct at 704-351-1519. Terry
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