When locally/regionally owned companies make a difference over national firms
The issue of a local economy is now more of a micro-business discussion, such as various local first/buy local campaigns or the locavore movement in food production.
Webster's small size makes it more nimble than bigger competitors. But its track record shows how focusing on customer service can pay off for banks and borrowers. Webster services $8 billion in mortgages and home-equity loans, a tiny fraction of Bank of America Corp.'s $2 trillion portfolio. Webster also owns 75% of the loans that it services, helping the bank call the shots. Just 1.84% of the mortgages serviced by Webster were at least 30 days past due but not in foreclosure as of June 30. The U.S. average is 8.15%, according to Lender Processing Services.
When it restructures a loan, Webster usually waives late fees, penalties and unpaid interest instead of adding them to the loan balance—and putting homeowners deeper in the hole. Borrowers don't have to make months of trial payments before the modification is made permanent.
A dozen employees in Webster's collection unit staff the front lines, prodding borrowers with hardships to apply for help and then send in required documents. Seven loan-modification specialists sit nearby. Employee bonuses are tied partly to the number of modifications. About 80% of the agreements hammered out with borrowers are approved by Webster's management without any changes. ...
Webster has completed 1,184 modifications, boosting reserves by $20 million to cover possible losses. As of March 31, 9.6% of borrowers whose loans were reworked in 2010 were at least 60 days past due on their payments nine months later. The re-default rate was 24.7% for modifications completed by the largest U.S. banks and thrifts in 2010, says the Office of the Comptroller of the Currency.
What a difference compared to the big national banks, like Bank of America.
In "Mr. banker, can you spare a dime?, Joe Nocera of the New York Times describes how a couple small businesses tried to get loans for their successful businesses, in order to expand. One couple was rejected by 14 banks before being funded by a local institution.
... On another note, while it has been discussed in the Washington City Paper and this blog in the past, the lease to manage the retail in DC's Union Station is held by a nationally active firm based in New York. They paid $160 million for an 84 year lease ("Ground lease for Union Station changes hands" from the Washington Business Journal).
This is why I say the issues of "building a local economy" are more intricate than the typical "economic development" element that is present in Master and Comprehensive Land Use Plans. They need to be more fine tuned and nuanced and focused on the total net returns to the local economy from various actions.