Lessons from 'It's a Wonderful Life'

Ever see the movie, "It's a Wonderful Life," the 1946 classic with Jimmy Stewart? It's one of my favorites and I usually watch it several times each Christmas. The networks always seem to show it a dozen times throughout the holidays.

I watched it again last night -- not because I'm in the holiday spirit. A newscaster mentioned the movie a few days ago when discussing the $700 billion bailout plan, specifically the scene when Stewart's character, George Bailey, fends off depositors in a bank run.

Sticking together
"We've got to stick together," George Bailey tells a mob of anxious people wanting to withdraw their money from his savings and loan association. The problem: Bailey's funding source, the town bank, has called his loan, demanding payment in full to shore up its own depleted cash reserves and Bailey has no cash on hand to answer his customers' calls for withdrawals. In the end, he uses $2,000 of his own money and manages to have only $2 left at the close of business -- but he's still open for business. He declares: "We're a couple of financial wizards."

George explains to the mob that their money isn't at the savings and loan. It's invested in another person's house and another's loan. (See the scene on YouTube)

"You're thinking of this place all wrong," he says. "Your money is in Joe's house, that's right next to yours and in the Kennedy house and Mrs. Macklin's house and a hundred others. You're loaning them the money to build and they'll pay it back."

Present day parallels
The movie was set in the early 1930s. But fast forward to September 2008. Today, the Federal Deposit Insurance Corporation guarantees ordinary deposits up to $100,000 held in banks and thrifts. Nonetheless, depositors withdrew $16 billion from Washington Mutual between Sept. 15 and 25, when the FDIC closed the thrift. It was a bank run that led to the biggest bank failure in U.S. history.

Critics charge President Bush and Treasury Secretary Henry Paulson did a poor job of explaining why the $700 billion bailout was so vital to everyday Americans. I can't help but wonder if Bush, lawmakers and all of America should have watched that Jimmy Stewart scene again and again to understand our predicament.

I'll admit I'm as angry as everyone else about the debacle that our national economy has become. Even though banks made risky investments and backed subprime loans to people who shouldn't have qualified for them and even though a lot of people got caught up in the frenzy of making money off of these deals, we still need to find a way to save our banks a la George Bailey.

What's at stake
The basic truth is that if the banks go bust, we all have something at stake: The employer who can't hire or must lay off workers because banks are hoarding cash in the credit crunch, the laid off worker who can't pay local taxes and buy food, the family that can't afford to pay high interest rates or can't get a loan to buy a car to take them to work. It goes on and on. How bad will it get? No one is sure.

As George Bailey says: "We've got to stick together."

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