When I was a bond trader there was an old saying that “bulls make money and bears make money, but hogs never do.” In other words, those who kept their positions moving, selling and buying, would consistently be profitable, but the greedy ones who were always holding out for the last dollar would sooner or later get in trouble and lose money. Another interpretation might be that those who consistently do the right things will end up winners while those who try to keep it all for themselves ultimately fail.
Last week’s Wall Street Journal contained a rather refreshing story about how Webster Bank, a regional banking company headquartered in Waterbury, Connecticut, has been aggressively working with its mortgage customers in helping them remain current and stay out of default. For them “Foreclosure Has Become a Dirty Word” the headline read. With job loss and other financial hardships bearing on their lending clients in this difficult economy, Webster is bending over backwards to restructure loans, extend payment periods, grant temporary interest rate relief – anything to help people stay current on their payments and avoid foreclosure. As a result, many of their clients have been able to work through their financial difficulties without losing their homes.
What is even more impressive about Webster Bank, though, is its attitude toward these struggling clients as reflected in this story: “Two years ago, Webster cut the monthly payment on Anne Glenzer’s $60,180 home-equity loan by $123 to $366 after her job as a learning and development specialist was eliminated. Webster recently cut the payment to $206 after Ms. Glenzer and her husband, a schoolteacher, exhausted their savings. Both times Ms. Glenzer worked with Natalie Clark, who joined Webster four years ago as a debt collector. ‘She was sympathetic,’ says Ms. Glenzer. ‘She didn’t make me feel like a failure.’” Speaks volumes about the culture of the bank and the character of Natalie Clark, doesn’t it?
And who’s the big winner in all this? Well, for sure it is the struggling homeowners, but time will most likely prove the bank to be the biggest winner. Why? Because by doing the right thing they will prove the point that bulls make money and bears make money, but hogs never do.