What a sad day for Charlotte and for North Carolina.
One of our most valuable corporate citizens chopped up and sold off like so much junk at a garage sale. At a garage sale price.
Wachovia's demise after a 100-plus year history was avoidable. Former CEO Ken Thompson, chairman Lanty Smith and a risk-taking board shelled out more than $25 billion for Golden West Financial and its toxic mortgages two years ago at the height of the real estate bubble. The poison has been running through the bank's veins ever since, and on Monday the once-great company essentially died.
Those left behind are many. Employees, many thousands of whom can expect a pink slip. Shareholders, who watched Wachovia's stock freefall from above $60 shortly before the Golden West deal to $1 on Monday. And Charlotte-area residents, who will now wrestle with an even tougher housing market, a slower economy and the potential loss of millions in corporate philanthropy and goodwill.
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Each of these hurt. The financial hit to Charlotte will be dramatic. But expect a significant impact on Charlotte's education, community development, arts groups and other nonprofits, too.
They're victims of bad business, and a CEO and board that didn't have the foresight to see the financial crisis coming despite warning signs. The once-conservative Wachovia bought a mortgage business with little regard to risk and then embraced so-called Pick A Pay loans long after their deadliness was evident.
Ken Thompson has been one of Charlotte's great civic leaders. But Golden West was a colossal mistake. And even after the purchase, Mr. Thompson, Mr. Smith and the board had time to get the risky loans off the books but did not. Then the bubble popped.
So what's next? What will happen to the arts campus and new headquarters going up at South Tryon and Stonewall? What will happen to our local economy? What will happen to Wachovia's corporate and employee charitable efforts?
We as a community must decide how to react. First, we need to give Citigroup a chance. It won't have the intense loyalty to Charlotte that Wachovia has had, but we should welcome the company to town and encourage it to make a substantial commitment here. It will see what a great place this is to do business.
And we must step up as a community and meet this challenge. Wachovia as we've known it is gone. We can no longer rely so heavily on the two banks to lead this city and region. Other businesses and residents need to seize this opportunity to take on new leadership roles, civically and financially. There's a lot of intellect and money in this town that up to now has not played a prominent civic role. Now's the time.
How we respond will determine whether this is just a sad end or the beginning of something bright.