GUESTWORDS: George Bailey, Mortgage Czar

By James Monaco

    When you’re watching “It’s a Wonderful Life” this Christmas season I hope you’ll note how much this masterpiece by Frank Capra has to tell us about the way we live now — and the way we used to live then, in a more rational and humane time.
    The Bailey Building & Loan Association helped to build Bedford Falls into a thriving community where even an immigrant like Giuseppe Martini could start a business, buy a house, and share in the prosperity of postwar America. Why? Because the economics of Bedford Falls was local, not global. George — and before him his father, Peter — knew the human beings their bank lent money to. They judged their reliability, their creditworthiness, by looking into their eyes. If someone slipped behind in payments, they made a human judgment: Will he recover? Or will he go under?
    I doubt George Bailey foreclosed on many residents of Bedford Falls. Most of those who had fallen on hard times would recover. Bailey Building & Loan had little to lose giving them some flexibility. If you can’t pay a 20-year mortgage, maybe a 30-year mortgage would help. I’ll bet George even took rent instead of mortgage payments from some of the residents of Bedford Falls. No way he wanted to see empty houses in Bailey Park.
    But that was then: a more personal, local, rational, real economy. This is now: a globalized, digitized, abstract, virtual economy. George Bailey’s Building & Loan was swallowed up by some international financial conglomeration when George died in 1982 and Zuzu and her siblings couldn’t come up with the cash for the inheritance tax. And the new bank doesn’t own the mortgage on Giuseppe Martini’s house — 100,000 investors own a sliver each (although none of them know it).
    Blame it on computers. When George had to write down each loan and each payment by hand he was forced to think about the people getting the loans, making the payments, living in those houses. Now we live in a shell-game economy where you never know which shell hides the pea.
    Mr. Potter would have understood this in a trice: What a great idea! Separate the money from the people, a little sleight of hand with the people, then market these “assets” sliced and diced to a huge crowd who have no idea about the people who owe them money!
    But in the classic movie, Mr. Potter didn’t win. When Uncle Billy foolishly misplaced the eight grand deposit (think Fannie Mae, or the S.E.C.), the people came to George’s defense with an outpouring of necessary capital. Perhaps that is what we are now trying to do (although so far, the capital has gone to Mr. Potter, not Bailey Building & Loan, or Mr. Potter’s victims).
    The question no one has asked or answered so far is this: Out of all these disastrous foreclosures, how many are the result of stupid loans that George Bailey would never have written, and how many are due to shell-game scams by the Mr. Potters of this world — mortgages that would otherwise work if Bailey Building & Loan took them over, at fair rates, on honest terms? My guess is that 90 percent of recent foreclosures would never have happened if a local, honest banker like George Bailey owned the mortgages.
    At one point, Mr. Potter observes, “Peter Bailey was not a businessman.” How true. When Peter and Potter were boys, 100 years ago, the great American economist Thorstein Veblen castigated “businessmen,” whom he defined as those whose only aim was to make money, and contrasted them with “industrialists,” who made products they were proud of. George and his father before him were in the banking service business — not the corporate profits shell game.
    And what would George (or Thorstein Veblen, for that matter) think of the current situation if Clarence brought them back for a visit? Didn’t we fight these battles a century ago when Veblen wrote? How did we erase the progress of the first 80 years of the 20th century so quickly?
    It once was a wonderful life — and it can be again. We just need to shift focus from the money to the people: fewer bailouts, more Baileys.
    (Clarence, can you hear us?)
    James Monaco is the author of “How to Read a Film,” a new edition of which came out in 2009, and other books about film and media. A “confirmed localist,” he lives and works in Sag Harbor.