Thursday, October 02, 2008
Epic Fail
So, the world banking economy has fallen apart.
The financial markets experienced extreme turmoil in the last week, led by the sale of Washington Mutual to Chase and Wachovia to Citibank. As a result, the United States now has four major banks, adding to the credit crunch now experienced by borrowers.
Clearly, the Valley has played a big role in the eventual demise of Wamu and Wachovia, and by extension, assisted in the world market drop. Washington Mutual, a major "thrift" bank from Seattle, had been around since the turn of the 20th Century, ironically stating on its website that Wamu made its first acquisition in 1930 when it acquired financially distressed Continental Mutual Savings Bank. Wamu expanded greatly in the 1990's, including acquiring American Savings Bank of Stockton and the Great Western Bank of Chatsworth/Los Angeles. Wamu also bought Providian, from San Francisco, one of the major credit card providers.
Wamu's inheritance of the American Savings Bank holdings included a headquarters building in downtown Stockton. However, the bank's administrative presence in Stockton had been on the decline for years. Recently, the City of Stockton began making plans to make the Washington Mutual building the new city hall.
Meanwhile, Wachovia has recently made an aggressive move into the Valley. In fact, even at this writing, Wachovia/Citi is working on opening new branches here. Wachovia's past in Northern California has been extensive. The purchaser of Wachovia in 2001, First Union shed its name to take on the moniker of its acquisition. Previously, First Union had tripped up with problem-filled genesis when two North Carolina banks merged. Also, First Union had purchased the Money Store, know well in the Valley as it was headquartered in West Sacramento's ziggurat. Two years after the purchase, the Money Store was shuttered at a loss of $1.7 billion.
Financier's believe the bulk of Wachovia's troubles came after the purchase of Golden West Financial/World Savings Bank. Golden West was involved extensively in high risk mortgages throughout California, many of it's loans going to homeowners in the Valley. In 2006, Fortune magazine named Golden West the "most admired company" in mortgage services. Apparently, Fortune has something akin to the infamous "Sports Illustrated cover jinx."
These banks, and really the rest of the finance industry, made it commonplace to loan to suspect borrowers, or to extend too much credit to borrowers that would clearly have been better served with a more modest loan. While borrowers could have certainly made it work with $200,000 fixed rate loans, lenders got creative, and allowed customers to fall into the trap of unsustainable payments with adjustable rate loans of tens to hundreds of thousands more. This drove up the median price of houses, creating an even larger customer base that would have to accept adjustable rate mortgages to own a home or borrow against their home.
When interest rates eventually rose (who would have thought over the length of a 30 year loan that rates would go up?), massive numbers of borrowers could not continue to pay. Lenders like Wachovia and Washington Mutual had a huge inventory of repossessed homes, with an inability to sell at previously inflated prices, while also being unable to keep up the charade that adjustable rate mortgages would be a safe investment for future homeowners. There seemed to be no way to climb out of the hole they had dug themselves into. They had no recourse, setting up Wamu's public seizure and sale to Chase last week.
Are there any lessons in this? Who knows. It seems that in capitalism, some companies will always seek short term gains rather than long term stability. Our financial system requires ever growing dividends for stock holders, who rail against the sometimes reasonableness of stagnant growth. In a way, we are doomed to repeat the failures of today's financial systems. It may take another form, in another industry, but shaky investments and an avoidance to recognize the worst case scenario will return again. Plus, we are not yet into the clear.
Labels: Chase JP Morgan, Citibank, Stockton, Wachovia, Washington Mutual, West Sacramento
Tuesday, July 22, 2008
Valley City Names Origins
Ever wonder how a city got it's name?
Today, ValleyVue brings to you a history lesson on names of a few of the Valley's cities.
Coalinga, a city 60 miles southwest of Fresno along I5, has an interesting name source. In the 1800s, the Southern Pacific railroad had a station there called Coaling Station A. Take out the "station", and you have the name of the city, pronounce Coe-a-ling-a.
Some Valley cities come from Spanish origins. Fresno, for instance, means "white ash trees".
Although Manteca is the Spanish word for lard, city residents intended on calling their town "Monteca." However, the Central Pacific Railroad misprinted the name, and Manteca was eventually adopted.
Sacramento, another Spanish word, was the name of the river and valley after Spanish explorer Gabriel Moraga named the geographical features after the most Holy Sacramento of the Body and Blood of Christ. John Sutter wanted to name the area "New Helvetia", but his son and other city founders renamed the town Sacramento after the already established name of the Sacramento River.
Captain Charles Weber (which Weber Events Center is named after) decided to name Stockton after Commodore Robert F. Stockton. Prior to that, the area was referred to as Tuleburg, Gas City, and Mudville. It seems as if Weber made a prudent decision.
Visalia is named after Visalia, Kentucky, which was the home of surveyor Nathaniel Vise, one of the area's first American settlers.
Then there are cities where the origin of the name is in dispute. Lodi is such a city. Most believe it was named after Lodi, Illinois, where some of the settlers were from. Others believe it was either named after a place in Italy or a championship horse.
Whatever the origins of the names, they certainly give character to the Valley's cities.
Today, ValleyVue brings to you a history lesson on names of a few of the Valley's cities.
Coalinga, a city 60 miles southwest of Fresno along I5, has an interesting name source. In the 1800s, the Southern Pacific railroad had a station there called Coaling Station A. Take out the "station", and you have the name of the city, pronounce Coe-a-ling-a.
Some Valley cities come from Spanish origins. Fresno, for instance, means "white ash trees".
Although Manteca is the Spanish word for lard, city residents intended on calling their town "Monteca." However, the Central Pacific Railroad misprinted the name, and Manteca was eventually adopted.
Sacramento, another Spanish word, was the name of the river and valley after Spanish explorer Gabriel Moraga named the geographical features after the most Holy Sacramento of the Body and Blood of Christ. John Sutter wanted to name the area "New Helvetia", but his son and other city founders renamed the town Sacramento after the already established name of the Sacramento River.
Captain Charles Weber (which Weber Events Center is named after) decided to name Stockton after Commodore Robert F. Stockton. Prior to that, the area was referred to as Tuleburg, Gas City, and Mudville. It seems as if Weber made a prudent decision.
Visalia is named after Visalia, Kentucky, which was the home of surveyor Nathaniel Vise, one of the area's first American settlers.
Then there are cities where the origin of the name is in dispute. Lodi is such a city. Most believe it was named after Lodi, Illinois, where some of the settlers were from. Others believe it was either named after a place in Italy or a championship horse.
Whatever the origins of the names, they certainly give character to the Valley's cities.
Labels: California Central Valley, Coalinga, Fresno, Lodi, Manteca, Sacramento, Stockton, Visalia
Thursday, July 10, 2008
What is the Tipping Point for Stockton?
In the past, this blog has reported on the "renaissance" of Stockton, and it remains apparent that improvements have taken place in the "Sunshine Seaport." However, Stockton is still hampered by an image problem, one of crime and poverty.
In today's Stockton Record, city consultant Roger Brooks talked about Stockton unfairly being label by its own citizens as a grim place to live. Meanwhile, for an outsider's perspective, Elk Grove columnist for the Sacramento Bee Bob Walter fantasized about a future Amtrak station in Elk Grove, giving an anecdote about a conductor in Stockton warning him not to park his car in the lot overnight to avoid the fate of a previously unfortunate rail customer who had his car stripped.
Brooks recommends adopting a logo of "Celebrate" to get Stocktonians to enjoy their downtown amenities. He suggested playing music in public squares such as the Weber Points Event Center, and putting a fountain in the turning basin. The idea is to make Stockton residents feel more civic pride and get them to go downtown.
Michael Fitzgerald wrote in his Record column about the need for people on the street to keep crime down. He talked about pedestrians and the benefit of having an increase of residents in downtown housing. Eyes from windows and people walking around are theorized to make the less bold criminals think twice before doing things society frowns upon.
Here's were Stockton's problems become confoundedly complex. Will upstanding residents move into a community they know has violent and property crime issues? Fitzgerald partially covers this conundrum with the need for Stockton to reduce red tape and reduce costs for downtown developers by $100,000 per housing unit. Will Stockton be able to attract enough developers to gentrify the downtown area enough to make it attractive for all residents of the city, and at some point in the future, tourists? Why would developers or residents take a chance on moving downtown when so many have had their own anecdotes about crime and thuggery in the central city?
It becomes obvious Brooks' ideas to improves citizen's moods must go hand in hand with an evident change in downtown. Brooks himself warned the City Council from advertising a slogan until the reality of the idea is met. His idea to decorate a police car resulted in a negative response by Chief Tom Morris, who said Stocktonians "want a professional and visible police presence that will impact our violent crime rate." Another idea by Brooks, to put free WiFi throughout downtown, will definitely not bring the intended consequences (of having people use their laptops). Clearly, people carrying around laptops through Stockton's current downtown will last only long enough for someone to "offer" to take it off your hands, for free!
The problem is Stockton's problems aren't perceptions of its residents. It's that the perceptions are based in reality. In 2006, the FBI ranked Stockton with the 30th highest murder rate in the country among cities 200,000 or larger. By comparison, Los Angeles was 31st, Sacramento 32nd, and San Francisco 36th. Other similarly maligned Valley cities Fresno and Bakersfield had lower murder rates than Stockton. Meanwhile, Stockton had the 2nd highest violent crime rate of the state's large cities, behind only Oakland. Furthermore, Stockton had the highest property crime rate in the state, with 6811 cases per 100,000 residents.
There is a balance in Stockton, with the focal point being the downtown neighborhood, and the lean of the teeter totter of justice going to the lawless. Efforts are being made to combat these problems, but Stockton has a long way to go before it begins tipping into prosperity.
Labels: California Central Valley, Crime, development, Stockton
