Business

When the banks hurt, the pain's spread around

When Wachovia cut corporate dinners at Harry & Jean's more than a month ago, the restaurant's manager, Roger Polsky, had a hunch that the bank had hit a rough patch.

The dinners can average more than $2,000 for 10 people, a steady source of income for the upscale restaurant just blocks away from the bank's Charlotte headquarters.

Tuesday's news that Wachovia had lost $8.9 billion in its second quarter and is looking to cut 10,750 positions companywide underscored tough times in the banking sector.

Earlier in the week, crosstown rival Bank of America said earnings plunged 41 percent, though it announced no new layoffs.

But in Charlotte, the nation's No. 2 financial center, the troubles of banks are felt beyond bank towers.

They ripple into all kinds of businesses, such as cab companies, barbershops and hot dog stands – some of which are already feeling the pinch of an economic slowdown.

Charlotte's economy is roughly as dependent on finance-related jobs as it was five years ago. Nearly 10 percent of Mecklenburg County workers were employed in finance and insurance last year – the same percentage as in 2003, according to the N.C. Department of Commerce.

Wachovia has nearly 21,000 workers locally, and Bank of America has roughly 15,000. Wachovia said Tuesday it will cut the jobs of 6,350 people now working for the bank and eliminate 4,400 unfilled positions. It did not break down locations of the cuts but said the bulk of the cuts will be outside the Charlotte area.

Some businesses have already felt the combination of a slowing economy and weak earnings at Wachovia, even months before Tuesday's report was released.

The lunch-time crowd at Harry & Jean's on Tryon Street has stayed steady so far, Polsky said, but dinner has dropped off by nearly 30 percent in the past couple of months. While the restaurant hasn't had a large Wachovia dinner in the past six weeks, Polsky said, Bank of America continues to hold corporate dinners there.

“It has affected us greatly,” Polsky said. “But what can we do?”

Several local businesses have already seen customers out of work.

Matt Sielsky, owner of Matt's Chicago Dog at the Green on Tryon Street, said several of his usual Wachovia diners have recently come in wearing golfing clothes. When he asked them if they were on vacation, they told him no. They had been laid off.

“I expect to see soon some more of our regular customers not in the position they were in before,” he said.

While Sielsky said he is concerned about the job cuts from a personal perspective, he is not worried about the financial stability of his restaurant. In the past few months, he has seen sales grow as people look to save money with a cheaper lunch, which at Matt's Chicago Dog averages $6.

News of possible job cuts hit hard for taxi driver Vincent Parson, who was waiting Wednesday morning for passengers on College Street outside of Wachovia. The ripple effect from Wachovia is coming at a time when taxis are seeing fewer passengers already, he said. Locals have opted to wait longer for the bus to save a couple of dollars on a fare.

“We're basically relying on Wachovia employees and Bank of America employees,” said Parson, 41, who works for Yellow Cab.

The possibility of rain had brought him to work early, but no customers were around. He shook his head as he looked at news about Wachovia in Wednesday's Observer.

“We definitely don't want to see people laid off,” Parson said. “But it's not in our hands.”

Cecil Taylor, 61, has owned the Arcade Men's Room barber shop in the Latta Arcade for nearly 40 years. He said half of the shop's clientele comes from nearby Wachovia and he expects business to remain busy.

He is mostly concerned about what an ailing Wachovia could mean for the area surrounding the bank's uptown headquarters, which has seen development in the past decade.

Having made it through other recessions and job cuts, he is trying to remain positive.

“You can't worry about it,” Taylor said. “I'm not in charge.”

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