Add cities to the list of victims of the Great Disruption

Some of America’s most prosperous cities are also among the casualties of what I’m calling the first stage of The Great Disruption — the current financial crisis.

Charlotte, a middling Southern town built into a city by two money center banks, will see its world changed radically whether Wachovia is bought by Wells Fargo or Citigroup. At least one-fifth of its jobs are in banking, and these are high-paid corporate jobs with benefits. Virtually every advance in Charlotte, particularly its revived downtown, came from the leadership of Wachovia and Bank of America. Now half of that will be gone, and the claim to being America’s second-largest banking center.

I make a prediction: Bank of America will soon move its headquarters to New York. The decision will likely be camouflaged in language of "dual headquarters" or some such corporate claptrap. But BofA’s best and brightest will feel an increasing need to be in what’s left of America’s financial capital. After all, the men who built these powerhouses as a powerful, personal gift to Charlotte are retired.

I remember writing a column in the Charlotte Observer around 1996
saying the city was too dependent on banking. The reaction from the
boosterocracy, partcularly at the Charlotte Chamber, was sharp and defensive, in the tiresome vein of all such propagandists. Well, now they will learn. It matters when the CEO lives in town. And however many jobs remain, there won’t be any corporate imperative to, say, revive Fourth Ward or build a new South Tryon Street. This incredibly rich city, which was a major world hub of capital, failed to use the good times to lure other corporate headquarters downtown, or do more to create research and higher education downtown. It will go, like so many of the cities its merger-crazy banks victimized, from a headquarters to a "market."

In Seattle, the Disruption has vaporized two major headquarters, Safeco and Washington Mutual, and with them will go thousands of downtown jobs. As in Charlotte, these kind of financial institutions are ideally suited to downtown skyscrapers. They won’t easily be replaced — and with them will go a huge infusion of philanthropy and civic leadership. Fortunately, Seattle is much more diversified, and downtown is much more "done." But it will be a challenge.

The best hope for Charlotte is that the two banks survived and drove downtown development long enough to establish a critical mass — complete with light-rail — before the city killing outer freeway loop was completed. But Charlotte is in for a much rougher ride. This is a city that has had an upward ride for some three decades, going from a feeling of being nobody to a sense of entitlement, inevitability. Unlike Seattle, it has never had to master the art of reinvention.

The other phases of the Great Disruption — higher gas prices (and a preview of future shortages in the NASCAR Southeast recently), foreclosures and global warming will be very hard on the suburbs. The cities that win the global race for talent and capital will have lots of choices, especially with vibrant downtowns and walkable, transit-connected urban neighborhoods. These cores are truly sustainable in the new era dawning ominously over American suburbia.

So this will be a test for city leaders. Ultimately, we need to break up the big institutions, divest the concentrated cartels, and reseed headquarters around America, while creating and growing new companies, particularly in the urban core. These giant companies aren’t healthy for the economy, or for the civic life that marks a civilization.