One of North Carolina’s Largest Employers at Risk? An Economy Teetering on the Edge

As of this time last year, Bank of America employed 15,000 people in the city of Charlotte, NC. It is one of North Carolina’s largest private employers.

The last couple of days have been a whirlwind for this company which is one of the largest banks nationwide. It has apparently gotten itself into some degree of trouble.

A high interest rate economy can cause banks to make more money. However, if the economy is tanking, then less loans are originated.

But there is a potentially bigger problem. That is the mix of Treasury notes and bonds in which the bank invests in a high inflation environment; and when they come due. That is the problem that sunk several banks earlier this year. If depositors perceive instability, bank runs can occur very quickly.

It is unclear to what extent jobs with Bank of America might be in jeopardy.

A couple of voices are predicting the potential for a severe recession and/or collapse. From the left, Mohamed el-Erian makes the case.

And on the right, Peter Navarro makes a similar case from a different point of view. He is an economist who served in the Trump Administration. The current environment includes rising interest rates; high inflation; failure of the commercial real estate sector (especially with respect to office real estate); bank failures and instability in the bond markets; our nation’s $2 trillion annual deficit; rising costs of oil; and our enormous national debt with the poverty cycle it is beginning to create. Navarro also cites the prolonged unnatural stimulation of the economy by the Federal Reserve that ultimately must have consequences. His substack article is found here. But he also had an extended appearance on War Room yesterday that you might want to check out.


5 thoughts on “One of North Carolina’s Largest Employers at Risk? An Economy Teetering on the Edge

  1. TC: Three great videos. Thanks for sharing. (The Market Watch links are behind a pay firewall)

    As you say Navarro is a notable economist, author, and public servant who is credited with shaping a large part of the Trump administration’s trade policy, especially in regard to trade with China.

    I agree with him that ” cash is king ” at least for this time.

    For those with a large nest-egg I would listen to Navarro. Hopefully he will find a place in the 2nd Trump Administration.

    1. For whatever reason, I did not run into an issue with the Market Watch paywall. Who knows how these things operate?

      In any event, El-Arian is saying many of the same things as Navarro. And Bank of America has lost about one-third of its value over the last year. I saw another presentation a couple of nights ago that also dramatized the difficulties that Bank of America faces because of the mix of maturities for the treasury bonds/notes the bank holds.

      It is also being dramatized that a number of foreign nations are getting rid of the US Treasuries they had purchased. And because interest rates on these bonds have gone up, the value of the bonds have gone down.

  2. By the way, because Bank of America is likely to be regarded as Too Big To Fail, it will likely be bailed out by the taxpayers in the event it runs into trouble. Recall 2008. But as Navarro seems to suggest, we can’t keep doing that forever.

  3. Just so happens that I have a small CD with BOA. I doubt there will be a run on them like Silicon Valley Bank but my deposit is FDIC insured. In the mean time I will just collect my interest and watch whatever pains they may have to endure.

    Maybe management style has changed since Hugh McColl left BOA. During the financial crisis of 2007-2008, after McColl’s retirement, it was dubbed “too big to fail” and received $45 billion in federal government funds. In a 2012 article for Rolling Stone titled Bank of America: Too Crooked to Fail, author Matt Taibbi attributed factors at Bank of America leading up to the financial crisis of 2007–2008 directly to McColl’s creation of a coast to coast bank, saying the “concept of an overmassive, acquiring-everything-in-sight, bicoastal megabank was hatched” in a “terminal inferiority complex” and described McColl (along with Ed Crutchfield of then First Union) as having launched “a cartoonish arms race of bank acquisitions that would ultimately turn the American business world upside down.”

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