We all remember the scene from the movie where the crash of '29
occurs and there's a run on the bank, and there's Jimmy Stewart using
his own money to keep the bank afloat. And remember how he describes
how one depositors' money isn't in the bank, but in his neighbors'
homes? So, how did we end up right back in this mess when the message
was so clear? Remember the other movie line we seemed to revel in
recently? "Greed is good." Only for the greedy. Greed, yes. But a lot
more.
It's easy to see who are the good guys and the bad guys in Bedford Falls. After all, it's all in black and white. There's the Baileys and the good ol' Savings and Loan, and Potter (no, not the wizard -- although we could use a little magic right now) with his me-first greed, and the bank examiner wanting to be home for Christmas.
And there's George Bailey, scrimping and saving his entire young life to go off and see the world. Sure, he could have tried to secure a loan on the promise to pay it back at a later date. But he didn't. If he'd wanted that loan in the past 10 years, he'd have got it, so long as he was still breathing when he walked through the bank doors. In some banks, they wouldn't even have checked for a pulse.
So, what happened? Reaganomics. Deregulation of the banking industry was seen as a good thing, but what few seemed to realize is we left the fox in charge of the hen house. Clarence never showed up to stop the Baileys of the world from jumping and Potter really did take over Bedford Falls.
No one watched the banks for the last 30 years and my money was no longer in my neighbors' homes. It was on Wall Street being bundled into mortgage-backed securities with insurance (that wasn't insurance) against failure. The old shell game of the street corner moved up-town to the board rooms.
So, now we have to scrape a little deeper and come up with $700 billion to keep the excess of greed afloat. European governments are doing the same on a smaller scale, but with a twist: the cost to do business is accepting government oversight again. Banks there will get the loans needed as long as the government owns a share of the banks, no CEO windfalls for leaving the banks, and no dividends until the governments are repaid. Will the U.S. follow suit? Only time will tell. And with a presidential election in its final weeks we could be promised the moon.
George Bailey promised the moon also, and it worked out well for him. Let's hope we do as well... and Clarence is around somewhere...
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