Tipping Point: Financial services

More than any other person, Hugh McColl is responsible for North Carolina’s prominence in the financial sector. During his 18 years as CEO of what was NCNB Corp. and later became Bank of America Corp., the company stretched its footprint from one coast to the other and became the nation’s second-largest bank holding company.

NCNB was always in favor of interstate banking, but nobody else in the state was. We got into Florida through a loophole. Florida law precluded us from buying a bank or bank holding company but did not preclude us from buying a trust company there, so we bought the Trust Company of Florida in the ’70s. Then they passed a law trying to keep anyone else from doing that, and in doing so, they wrote a law that allowed us to convert the trust company to a bank and buy other banks. And as we began to grow in the early ’80s, it put pressure on the other banks, because they realized if they allowed us to grow unchecked in Florida without them growing, they would be left with a huge competitive disadvantage. That concern then made them willing to enter into a legislative compact, which became the Southern Banking Compact. That effectively put up a wall around the Old South, less Texas. It said banks within that region could acquire any bank or holding company in that region and somebody from outside of there couldn’t. That then allowed First Union and NCNB to grow exponentially without being interfered with by the New Yorkers or the Texans, who at the time were quite wealthy. At first, the compact worked to keep out the Yankees, but it eventually became a Berlin Wall keeping us in. NCNB escaped through our acquisition of the failed First Republic Bank in Texas. That then led to an explosion of interstate banking and, ultimately, the demise of the Southern Banking Compact in the late ’80s. Our bank and Fleet Bank and Citicorp and maybe one or two others campaigned hard to change the national law for allowing out-of-state banking and subsequently interstate branching, which meant we could branch across state lines, not just buy up banks. And that then led to humongous expansion of what is now Bank of America and Wachovia.