It's a Wonderful Life and Sub-Prime 2007


You don't have to be an expert at analyzing films or the economy to figure out that the holiday season favorite, It's a Wonderful Life, has never been so right on. George Bailey does indeed represent the American mortgage company which supplied the money for those who wanted to build and buy their own (modest) homes. Mr. Potter is the greedy banker who laughs and offers 50 cents on the dollar to the citizens of Bedford Falls when there is a run on the bank, and on Bailey's own equivalent of the small town mortgage company.

Bailey, played beautifully by James Stewart, cares for his neighbor, be it the new Italian immigrant family buying their first home, or the pharmacist who has lost his son (in Iraq?). He listens to the people of his town, and he trusts them. And in the scene where there is almost a run on his own company, he explains to all of his customers that they are the mortgage company. Without trust, there is no value to their endeavor, and that it is by Mr. A paying back each month that the new loan is made to Mrs. B, and so on and so on. If they all lose trust and give up faith, it all comes tumbling down. As Bailey says, "The money is not here, it is in his home and her home…"

And that is exactly the problem, the money is not really there, it is tied up in your neighbor's home and someone else's home. And if your neighbor cannot pay back, or you cannot pay back, the entire system suffers. The problem is that trust was not part of this sub-prime equation once someone greedy got their hands on it. In the beginning, the idea was to actually help people build up equity, therefore strengthen the economy, by buying their own homes. Mortgage companies do not want everyone's homes back, they want to sell homes. Many people in the business were actually excited that people who normally would not get access to money to purchase a home, could end up doing so and making monthly payments that were less than rent to a faraway landlord. Because one way you begin to touch the American Dream is by building up equity, and it was not those who took subprime loans who ruined the deal, it was the speculators who used cheap money to flip real estate. They were not investing in homes for their families, they were trying to make a fast buck. But both sides lose, when the borrower does not understand the contract he or she is signing, or no one factors into the borrowing equation the higher monthly payment of an arm.

More importantly, the entire U.S. economy and government is at fault, as so very many people are one illness or job loss away from not only not paying their mortgage payment, but their credit card bills, health insurance premium, etc etc etc. Wall Street has dealt with all this by using these mortgages, which have been repackaged and sold off, as some kind of asset on the other side of the world where no one cares anymore about Mr A or Mrs B until they stop making those monthly payments. Then there is no more money to loan and the money that was in his house and her house and was never really in the bank and the first place (try going to your bank and taking out a really large deposit…I tried it and they told me not even Brinks could deliver the money, which was not mine by the way) is in no one's house and the neighborhood dies and the house of cards begins to fall, until there is no house left.

So at the end of It's A Wonderful Life, when George Bailey is convinced by his guardian angel to not kill himself, but that his life has meaning and without him this world would be a place much worse off…is a hard sell this year. Is it playing on cable at all? Or did someone doing the holiday programming actually sit down and watch the film and realize the negative connotations…?

But there is still a positive side to all this story…which is that George Bailey's Savings and Mortgage Company does not go out of business and is not bought out by a greedy banker for 50 cents on the dollar…Bailey convinces his clients, who are also his friends, neighbors, and fellow citizens, to keep their money with him and keep loaning and helping their fellow men and women keep their homes. His town's economy does not go under. And the greedy banker ends up finding that, somewhere under his finely cut three-piece suit, he too has a heart.

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