AMGEN CEO:
> "Is there a downtown in Silicon Valley?" he asked.
> "There's a lot of wealth creation, a lot of innovation,
> but there's no real center, no downtown. Los Angeles is
> a lot like that."
Oh well, one more way LA is bleeding-edge, I suppose. I agree with the
article's assesment... it has a lot to do with the general resurfacing of
SoCal as media, services, and light mfg (instead of the old defense
conglomerates).
Wasn't it this past quarter that the 84k employees of Hollywood became the #1
sector?
Rohit
----------------------
No Big Bank to Call Its Own
By JAMES STERNGOLD
LOS ANGELES -- A pall descended over this usually upbeat city after Wells
Fargo & Co. of San Francisco succeeded in its hostile takeover of First
Interstate Bancorp., the last big bank based here.
Coming on top of a series of natural and man-made disasters, and the
departure last year of the area's two professional football teams, it seemed
like the final insult.
The initial result will be predictable and unpleasant. About 8,000 to 10,000
well-paying jobs will evaporate just as the Southern California economy is
emerging from a painful recession. Floors will be vacated in First
Interstate's office towers downtown, where the commercial real estate vacancy
rate is already a hazardous 20 percent.
Then, there is the feared loss of the bank's financial support of community
institutions, as well as millions of dollars of work for lawyers, accountants
and other suppliers of services.
These days, the largest locally controlled commercial bank based in Los
Angeles County -- which has a population of 9.2 million -- is City National,
an institution one-fourteenth the size of First Interstate. Many out-of state
and foreign banks also have large operations here.
But to a surprising degree, there are people who regard the takeover as
almost a positive reflection of a deep transformation of the region's economy.
On balance, they say, it does not bode ill for the future of Los Angeles, the
nation's second-largest city -- even if it has become a satellite city in
financial industries dominated by New York, Chicago and San Francisco.
"Over the next three to five years, we'll see this as part of a process of
creating a more diverse economic base, a more diverse employment base, a more
diverse credit base," said Stephen Trafton, chairman of Glendale Federal Bank,
a savings and loan institution that expects to capitalize on the banking
shake-up.
The business landscape of greater Los Angeles has moved from a centralized
economy dominated by big companies like aerospace manufacturers -- and banks
-- toward a highly dispersed economy propelled by small businesses, many in
entertainment and the electronic media.
Certainly, a strong financial presence here would add jobs, but the lack of a
big financial headquarters is not holding the area's economy back, experts
say.
And that touches on the deeper lesson in the takeover: the experience of Los
Angeles is foreshadowing developments that will influence the U.S. economy in
the years ahead, with growth and innovation coming increasingly from smaller,
younger businesses.
"Given a choice, sure, I'd like to see Wells Fargo headquartered here," said
Eli Broad, a civic leader and chairman of SunAmerica Corp., a big insurance
and financial-services company.
"But they're smart enough to understand this area. They're going to have
offices where the business is. Ultimately, it will have little, if any, impact
on the community."
Many here say that at one time Los Angeles would have been in trouble if it
had just lost its last big banking headquarters. Large banks financed large
companies in a way more modest-sized banks could not.
But times have clearly changed. Now, big companies go to the markets for most
of their capital needs, and heightened competition means that they can pick
up the telephone and approach just about any bank when they need credit or
other banking services.
Many big banks are dispersing their operations in pursuit of lower costs,
which means that they are less concentrated in their hometowns than they had
been years ago. First Interstate, for instance, has had its computer center in
Arizona and its loan-processing center in Oregon.
Some executives here say that Los Angeles was probably a little crowded with
banks, anyway. Certain other big markets, including metropolitan areas in
Texas and Arizona, have seen their leading local banks acquired by outsiders,
and those economies have thrived and banking services improved with new
services and competition.
For individual customers, the competition here is so keen here that most
people will probably not feel much of a difference.
Glendale Federal has been running humorous radio ads trying to win customers
away from the merged banks, saying that service will deteriorate and
emphasizing its own cool Southern California agility.
"This is one of the most competitive banking markets in the country, and
we've been trying to turn the heat up," Trafton said.
Robert Attiyeh personifies the civic and business difficulty that the First
Interstate takeover represents here. He is president of the Los Angeles
Philharmonic Association, and he fears that Wells Fargo will not support the
Music Center or local cultural institutions, preferring to put its money into
its hometown.
And Mayor Richard Riordan has said he is concerned that the bank will support
more activities near its San Francisco headquarters.
"I think he's right," William Zuendt, the Wells Fargo president, conceded in
an interview.
But Attiyeh is also the chief financial officer at Amgen, a leading
biotechnology company that typifies the new, knowledge-intensive economy, and
in that role he said that the news is not necessarily bad.
"Will we get by" at Amgen? he asked. "Yes. Other major national players are
going to be much more aggressive here, and smaller banks are going to grow.
The city is not going to be underbanked, and we may even benefit from the
competition."
And he added that though the downtown area might be hurt, the notion of a
city's downtown was becoming something of a relic.
"Is there a downtown in Silicon Valley?" he asked. "There's a lot of wealth
creation, a lot of innovation, but there's no real center, no downtown. Los
Angeles is a lot like that."
Indeed, Attiyeh's own company, less than 16 years old, is situated in
Thousand Oaks, an outlying area just beyond the San Fernando Valley and about
40 miles from downtown.
And Zuendt of Wells Fargo said: "My personal opinion is that a place like Los
Angeles should not be focused on major companies. Its growth is coming from
the huge number of smaller companies."
Wells Fargo has adapted to that pattern by becoming the country's largest
lender to small business in recent years, and it intends to continue the push,
he said.
Still, it may take residents some time to accept the loss.
"It's all about the aura of Los Angeles," said Carol Schatz, president of the
Central City Association. "It just looks like a loss of prestige for us."