It’s a Wonderful Life, and a lousy lesson in lending policy

Leave it to the mortgage market implosion to ruin It’s a Wonderful Life. I feel like part of me is dying as I write this, but the subprime debacle sure makes Frank Capra play differently. Take George Bailey’s famous exchange with the crusty old plutocrat, Henry Potter, after his father dies and leaves the future of the Savings and Loan in jeopardy.

“Just remember this, Mr. Potter,” Bailey shouts to the ungrateful, impolitic but nonetheless macroeconomically sensible old bastard, “that this rabble you’re talking about, they do most of the working and paying and living and dying in this community.  Well is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?”

Well, no, George, but it might be asking too much for them to own it if they can’t pay the mortgage.