Once, about 2,000 members of North Texas’ business elite gathered for a black-tie party to celebrate the grand opening of a major bank’s new headquarters. Interfirst Corporation had moved into the newly built Interfirst Plaza. Interfirst Plaza is a 72-story skyscraper that, nearly 40 years later, remains the tallest building in Dallas. As partygoers feasted on shrimp in a downtown skyscraper, city council members turned on the lights, painting the outline of the building neon green.
This event in September 1985 demonstrated the heights to which the city’s financial industry had expanded over the past several decades. Regional bankers thrived on lending to the oil and gas and real estate industries, and Dallas was home to three of the nation’s 25 largest financial institutions. The city’s financiers also had the ears of then-Vice President George H.W. Bush and Treasury Secretary James Baker. Both men are Texans and had close ties to the banking industry before taking up positions in Washington.
But months after the celebration, Interfirst Plaza’s luster had faded. The building’s developers noticed a gap in the skyscraper’s neon outline and turned off the lights completely. This embarrassment foreshadowed a far greater disaster for the bankers working inside. The price of U.S. crude oil fell to about $10 a barrel in April 1986, more than half the price it had been a few months earlier, when Saudi Arabia had doubled its production. Oil companies and real estate developers suffered from a glut in demand and oversupply due to the energy sector’s woes, defaulting on loans and shrinking the assets of regional banks.
In 1987, Interfirst merged with Republic, another major bank headquartered in Dallas, and collapsed a year later. This was the largest bank failure in American history at the time. Other banks in Texas laid off employees and were absorbed by out-of-state financial institutions reluctant to lend to local businesses, stifling economic development in the Dallas-Fort Worth area. “They say the Great Recession happened in 2008 and 2010, but the Great Recession in Texas happened in the 1980s. I think it was actually a recession,” he said at Texas American Bank in Fort Worth in April 1986. said Jody Grant, who became CEO of the bank and led it until its collapse in 1989.
Grant, founder and chairman emeritus of Texas Capital Bank, recounted the Great Depression of the ’80s from his fifth-floor office in an uptown Dallas skyscraper next to Klyde Warren Park. Below his window, construction workers were breaking ground on a new Bank of America office. Across the park, in a building, was JPMorgan Chase’s office, and down the street, Goldman Sachs was building a new Dallas campus that would house about 5,000 employees. Grant calls this area Financial Row. Combined with new or soon-to-be-completed national and regional headquarters for financial firms in suburban areas like Westlake (Fidelity and Charles Schwab) and Irving (Wells Fargo), the area represents a new booming era for banking in the Dallas-Fort Worth region.
North Texas has added about 100,000 banking jobs over the past decade, with about half of those jobs added since the start of the COVID-19 pandemic in spring 2020. . According to financial institutions, employment in the financial sector in the metropolitan area totals just under 370,000 people. Bureau of Labor Statistics. This recent growth spurt has made DFW the nation’s second-largest financial capital on this metric, leapfrogging Chicago and Los Angeles.
However, the region still has about 450,000 fewer jobs than the New York City area. For example, Goldman Sachs and JPMorgan Chase employ about twice as many people in New York City as they do in DFW, despite all of their investments in Texas. But finance jobs make up a larger share of total employment in North Texas at 8.7% than in the Big Apple (8.2%), according to BLS data.
Cities such as Dallas, Plano, and Irving have spent millions of dollars to attract banking jobs, believing they will have broad benefits to the local economy. Of course, the last time North Texas was synonymous with banking (in April 1986, nearly 10% of jobs in the region were in the financial industry), the light eventually went out and the region’s economy was in darkness. fell into.
almost no one expects Either the Dallas-Fort Worth area will replace New York as the nation’s largest center for financial jobs, or Uptown’s Financial Row will rival Wall Street as the symbolic and physical center of the industry. Dew. But the region’s financial influence on the economy and its reputation as a destination for bankers is growing. With financial firms clustered on the edge of downtown and uptown, on most weekdays you’ll see people wearing the unofficial uniform of “financial fraternity” consisting of long-sleeved button-down shirts and fleece vests. I can’t walk one block without doing it.
Dallas-Fort Worth emerged from the rubble of the ’80s as the region’s economy matured from oil, gas, and real estate to business services, manufacturing, and technology. Out-of-state businesses flock to North Texas for its lower taxes and cost of living. Twenty-two of the Fortune 500 companies are now headquartered in the region, compared to nine in 1979. This puts Dallas-Fort Worth fourth among cities with Fortune 500 companies, behind New York, Chicago, and Houston.
While Chicago is struggling with stagnant population growth (and complaints from some businesses about a tough business environment), North Texas is experiencing an economic boom. For Greater Houston, more than 20 of the 26 Fortune 500 companies are in the energy and petrochemical industry. That makes Houston banks more sensitive to oil and gas prices than DFW banks, said Tory Littlejohn, managing director at real estate services firm JLL Dallas. Fortune 500 companies headquartered in the Dallas-Fort Worth area are spread across sectors such as aviation, construction, health care, real estate and technology, including six of his companies in energy and petrochemicals.
William Maxwell, a finance professor at Southern Methodist University, said that diversity “created a gravity that started to pull everything else in.” [financial] A company that wanted to get closer to the company’s decision makers.” Initially, much of the growth in the banking industry involved support positions, employees who carried out investment decisions made by senior managers living elsewhere. But in recent years, these decision-making positions have been concentrated in DFW. “Every investment bank in the world is trying to get in front of a Fortune 500 executive in Dallas,” Maxwell said, adding that he’s more likely to do business with someone he’s “played golf with” than a New Yorker on a plane. “While wearing Gucci,” he added, it was highly sexual.
Asem Khalil was a lifelong New Yorker until about eight years ago, when his boss at Goldman Sachs asked him to move to Dallas to be closer to clients in the area. At first, Khalil envisioned an elevated city without culture. He even thought about the dreaded “Dallas Stock,” industry abbreviation for undesirable finance-related jobs, from Michael Lewis’s 1989 book. Liar’s PokerBut now, Mr. Khalil, Goldman’s global head of investment banking services, refers to Dallas as “we,” from the sporting events at American Airlines Center to the convenience of Dallas-Fort Worth International Airport to the financial He brags about everything from his industry friendliness. When his colleagues in New York heard he had to move and thanked him for his sacrifice for the team, they were now curious to see what life was like in Texas. There is. He says he frequently bumps into business leaders at Central Market or at youth basketball games near his home in upscale Park Cities, making connections that would be more difficult to make if he were just visiting from New York.
Proximity is so important to banks that the majority of JPMorgan’s regional employees (about 18,500, up from about 4,000 20 years ago) are located in offices on the edge of uptown Dallas, rather than in offices. He works at the regional headquarters in Plano. Much of North Texas’ growth is occurring in the suburbs and exurbs of Collin County. This sprawl creates room for land-intensive manufacturing companies and nearby banks to swoop in to finance their growth, said Diego Gordillo, regional head of middle market banking at JPMorgan. said. “Just from a geographic standpoint, Dallas can continue to expand horizontally,” he said.
Local governments are Betting big on the impact of the rapidly growing financial industry. The city of Irving awarded Wells Fargo a $31 million incentive package to build a campus at the site, scheduled to open next year. Goldman Sachs and Hunt Realty Investments, Goldman’s new real estate developer, received about $18 million in grants and tax breaks from Dallas. In return, the city is expected to receive about $2.4 million in annual tax revenue from the first phase of the Goldman Sachs development, and at least 35 percent of the 5,000 employees expected to work at the office. must reside in Dallas.
In 2022, the Dallas City Council debated the merits of providing financial aid to such wealthy corporations. Councilwoman Carolyn King-Arnold said the city is “putting money in the hands of people who eat regularly,” rather than in south Dallas, where the median household income is about 40 percent lower than in the metropolitan area. He said he was being asked to “do this.” Here, residents have fewer economic opportunities, including fewer physical bank branches offering loans. However, the bill was passed unanimously. said Tennell Atkins, Dallas Mayor and Chairman of the City’s Economic Development Committee. texas monthly He wanted Goldman Sachs to build an office south of Dallas, but believes financial incentives were needed to secure the deal and guarantee new jobs and property taxes.
He and others believe the Dallas-Fort Worth area benefits from banks and vice versa. Mr. Littlejohn, managing director of JLL Dallas, said the region’s economic diversity provides banks with an opportunity to diversify their investments while reducing the chance of an economic collapse like the one that occurred in the 1980s. . DFW recently ranked second among metropolitan areas on Moody’s Industry Diversity Index, behind Chicago and tied with Atlanta.
Before the financial crisis of the 1980s, Jody Grant’s Texas American Bank at one point put 40% of its loans into the oil and gas industry (and when that became riskier, the bank moved into real estate) ). Other big banks, which used to put 50% of their investments in oil and gas, also shifted to real estate when oil prices became volatile, leaving them with little room to weather the decline in both industries. (In contrast, oil and gas accounted for less than 3% of JPMorgan Chase’s total credit exposure in the first quarter of this year.) It is likely that this is the result of poor health.
Nevertheless, the financial sector continues to boom. Several major banks, including Goldman Sachs and Wells Fargo, have begun cutting jobs in 2023, reducing headcount by 2% to 7%. According to Reuters, more than 23,000 jobs at major banks have been lost as a result. However, overall employment in financial services was up slightly at the end of last year compared to December 2022. The collapse of the commercial real estate sector, which has been hypothesized since the start of the pandemic, could lead to further problems for banks. The good news for Dallas, Irving and other suburbs with new office space for the financial industry is that bankers are more likely to come into the office.
And they seem to be embracing Dallas and Fort Worth. “We haven’t had any trouble getting people to Texas,” said Rob Holmes, president and CEO of Texas Capital Bank. Clinton Warren, head of southern regional investment and advice for JPMorgan Chase, was initially concerned about Dallas’ old-money reputation. But he said there are people in the city who want to share the connection. That assessment contrasts with an anecdote Grant tells about a prominent banking executive who moved to Dallas in the ’80s after his company absorbed one of the region’s failed banks. When the executive applied for membership at the exclusive Dallas Country Club, someone on the membership committee ripped his application in half.
What about the new financial executives who have arrived in town in recent years? “They’ve become Texans,” Grant said, and he doubts he knows why. “Is there a better place in the world to live economically today than Dallas, Texas?”
