While I was growing up in Indianapolis in the 1960s and 1970s my grandparents, father and uncle owned small men’s and women’s retail clothing shops. At one time there were seven such stores scattered around the metropolitan area. When the 1970s recessions hit, displacing many mid level executives at insurance firms and automobile manufacturers, the family businesses couldn’t survive. The big department stores, who could buy in bulk from the clothing manufacturers and offer prices lower than my family could, essentially drove my family out of business.

I was present many years ago when a former customer once lamented to my grandfather that he missed the personal service that came with shopping at my grandfather’s old store. “Remember that time I needed the alteration right before my daughter’s wedding?” he asked. I remember my grandfather chuckling and shaking his head.

So I readily admit that I have a tendency to root for the little guy – the small businessman. Where possible, I forgo big chains if I have a local shop alternative. When my wife and I travel, we have a policy not to eat at chain restaurants. We instead wish to savor the local flavors that abound.

It’s therefore distressing to me to read and hear how the stimulus package considers such and such bank “too big to fail” or obsolete automobile manufacturers who haven’t come up with a sound product in decades too important to go into bankruptcy.

As an estate planning attorney who must deal with financial institutions both large and small, my experience with the large financial institutions has not been good. Too often, decisions are made in far off locations in board rooms filled with people who have no connection to the local market. In order to make money for their shareholders, they move service to a toll free number where a 23 year old desk clerk, fresh out of college responds to inquiries. All she seems to know about the client is what she can read on her computer monitor.

As we’ve already learned with some of the bailout money sent to these large institutions, management takes the opportunity to use the bailout money on nonsensical items like refurbishing executive suites or paying for ultra-expensive client promotional activities. I fear that more of the same will continue so long as the government believes that these large companies must go on, despite their inefficiencies and management’s lack of responsibility.

Recently a client told me that they didn’t want to invest their money with a local investment firm because they were afraid that there wasn’t a whole lot of depth at the firm. “If the investment advisor gets run over by a truck, then what do I do? They didn’t seem to have a whole stable of people behind him.”

Instead he invested with a larger outfit, one that promptly put his money into financials, emerging markets and corporate bonds that quickly sank with the market. Would he have lost money with the smaller firm? Most likely. We all have lost money in the recent economic downturn.

But I maintain that the smaller firms have someone in the office who will answer questions and who will be responsible for responding to the client’s concerns. If the advisor should get run over by the proverbial truck, there are always other good local firms available to take his place.

Technology today is what the Colt 45 was yesterday – the great equalizer. It’s been my experience that the smaller investment firms and companies have every bit as good information as the big boys do. Moreover, the smaller firms are typically more nimble in reacting to a crisis. They don’t have to wait for an edict from New York, Chicago, Atlanta or Charlotte before acting.

This country is driven by an entrepreneurial spirit. So long as the government encourages the development of small business through low taxes and small business friendly regulation, I have confidence that the demise of some of the larger banks and manufacturers will lead to a “creative destruction” into new, more valuable enterprises. Confidence in our capabilities will be restored.

It will take time. Until then, I hope that this gives you some food for thought when you consider the businesses that you patronize.

©2009 Craig R. Hersch .Learn more at www.sbshlaw.com