December 24, 2009
It's a Wonderful Life & The Mortgage Crisis
I had my annual viewing of It's a Wonderful Life, Frank Capra's 1946 classic, the other day, and it reminded me that a few commentators over the last year have drawn comparisons between the world of Bedford Falls and the Bailey Building & Loan, and the conditions that caused the current mortgage crisis.
The comparisons seem to go in two directions. Some have argued that when America ditched the Bailey Building & Loan model of small local banks as the locus for local real estate development and financing in favor of the nationalized lending institutions and international trading of pooled mortgage-backed securities, it set us on the road to ruin. But others have argued that it was the very assumption advanced by George Bailey that individual homeownership was the sine qua non of civic life and human flourishing that led to suburban sprawl, the decline of cities, and the irrational financial overleveraging that led to the subprime bubble.
Below are some links to articles comparing It's a Wonderful Life to the mortgage crisis, and I'll leave it to you to decide which critique is more persuasive, or whether there are elements of both that are true.
Just yesterday, Ray Brescia (Albany Law) sided with the Bailey Business & Loan and the CRA in "Banker's Holiday: Strengthen 'George Bailey's Law'" on the Huffington Post.
Andrew M. Rosenfeld (Chicago Law) compared the localized backing of whole mortgages with the national market process for securitzed mortgages last year Newsweek's "It's a Wonderful Mortgage Crisis."
Ross Douthat in the Washington Post suggested laying much of the blame on George Bailey for the expansion of easy credit and government overpromotion of suburbia in "Not So Wonderful Now: Looking for someone to blame in the worsening crisis? Let's go back to Bedford Falls". Douthat ultimately comes back to a limited defense of Bailey's vision, though.
I know that others have remarked on this theme so leave a comment if you know of a good one that I missed.
Watching the movie again left me with one more related thought: which is better, Beford Falls or Potterville?
Capra's audiences have long assumed that the quaint Bedford Falls was the ideal American community and that the wild Pottersville was dystopia. But a few years ago in Salon Gary Kamiya challenged this assumption head on in "All Hail Pottersville" with the simple observation that "Pottersville rocks!" I think there's something to be said for this. Bedford Falls does look a little boring. Putting aside the implication that instead of middle class homeowners Pottersville's denizens were all living in Mr. Potter's tenement slums, there is no reason that a community can't have a vibrant downtown accessible by neighborhoods. I know that Pottersville was painted to look like Sin City, but it also provided a busy and walkable area (with plenty of cops on hand to harass disoriented middle-aged bankers and guardian angels), and who's to say the more wholesome entertainment venues aren't thriving just a block or two away off of externalities generated by the seemingly popular Pottersville downtown entertainment district?
Maybe James Lileks put it best: "We all want to live in Bedford Falls . . . but we all would like a night in Pottersville." But wouldn't a good new urbanist say that they can both exist in the same community?
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