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This is the bust in the boomtown that banks built

Beneath Charlotte's shiny skyline, 'a new humility'

Few American cities prospered more over the last two decades than Charlotte, its growth propelled and gilded by Wachovia and its cross-town rival, Bank of America. Now Charlotte is suffering, as the crisis that shattered several of the nation's largest banks left many of the survivors struggling to recover.
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By Binyamin Appelbaum
Wednesday, October 21, 2009

CHARLOTTE -- A monument to the financial crisis is rising amid this city's thicket of skyscrapers: a gleaming, glass-walled trophy tower that was intended as a fitting headquarters for Wachovia's national banking empire.

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It will open instead as the headquarters of a regional power company. Wachovia, unable to survive a run of bad decisions, was swallowed by San Francisco-based Wells Fargo during the depths of the crisis last year.

Few American cities prospered more over the past two decades than Charlotte, its growth propelled and gilded by Wachovia and its crosstown rival, Bank of America. Executives shoehorned gaudy mansions into old neighborhoods around downtown. Workers poured into vast subdivisions on the city's ever-expanding periphery. With coffers overflowing, giddy public officials spent tax dollars on a manmade river for whitewater rafting.

Now Charlotte is suffering. Unemployment has spiked to 12 percent, well above the national average. Subdivisions sit unfinished. Mansions cannot be sold. The school system, which for years had recruited teachers from shrinking cities such as Detroit, laid off more than 1,000 employees this summer.

The crisis that shattered several of the nation's largest banks and left many of the survivors struggling to recover has also damaged the bank towns, the smaller cities that became financial centers in recent years -- less celebrated than New York but even more dependent on the industry.

The unemployment rate in Wilmington, Del., the nation's credit card capital thanks to lender-friendly state laws, has spiked above 11 percent. In California's Orange County, formerly the epicenter of subprime mortgage lending, the office vacancy rate stands at almost 17 percent. Other cities less focused on financial services also have taken hits, including Cleveland, which lost its largest bank, National City, and Seattle, home to the giant mortgage lender Washington Mutual, which became the largest bank to fail in U.S. history.

In Charlotte, the number of people served by the soup kitchen at Urban Ministry, a local charity, has increased 22 percent since August 2007, while the number of private airplanes arriving and departing from Charlotte-Douglas International Airport has dropped by 38 percent.

A city that for years proudly billed itself as the nation's second-largest banking center now is home to just one bank of any size. After Bank of America, the next-largest institution still headquartered in Charlotte has six branches and 49 employees.

"I think there's a new humility to Charlotte," said Bob Morgan, president of the city's Chamber of Commerce. "We didn't worry too much about the things being done in Dallas, Atlanta, San Francisco," he said, when banks in those cities were swallowed by Charlotte's giants. "We are now living it ourselves."

Grady Parker, who has shined the shoes of bankers for 23 years in a retail arcade across from Wachovia's former headquarters, said days now pass without a single customer climbing into one of his worn leather chairs.

"It used to be that you'd know you'd been to work," Parker said. "Now I'm just trying to hold on."

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