Trying times on South Tryon
Charlotte's banking landscape changed dramatically this morning when Citibank took over Wachovia in a deal brokered by the FDIC and the Treasury.
Wachovia's downfall can be traced to the ill timed purchase of Golden West Financial and the Option ARM. An Option ARM allows borrowers to skip part of their payment and add that sum to the principal (negative amortization). Introductory interest rates can be as low as 1 percent. Defaults have been rising as home values declined in both California and Florida where a significant percentage of Wachovia's troubled loans were made. When JP Morgan took a very aggressive write down of Washington Mutual's troubled assets last week, the pressure of its troubled $300 Billion mortgage loan portfolio became too much to survive.
Citi gets Wachovia's excellent branch network and depositor base (including me - when I first moved to Charlotte many years ago, it was easier to take a right turn to bank at Wachovia's predecessor, First Union, than to make a left turn to bank at Bank of America).
But what will happen to Wachovia employees and its banking presence in Charlotte where a new headquarters is currently under construction (illustrated) as the second largest bank in Charlotte always tried to keep up with Bank of America, its larger neighbor located at the other end of Tryon Street.
Read more from the NY Times.