Now that is some monumental bull. Being a shrewd business person does not mean that you can do dishonest and/or illegal things until you get caught, that just means you're a dishonest and criminal business person. Potter might have been shrewd if he deduced that Bailey didn't have the $8,000 because he saw him going out and spending it on hookers and drugs and then reported that to the regulators, but the instant he endeavored to steal the money (he knew who it belonged to and he should have returned it), he went from shrewd to criminal. End of story.

I'd say your attitude right there is the main cause of the whole sub-prime mortgage meltdown. People figured they could pawn off the toxic loans they were making, they could manipulate clueless borrowers, and that they wouldn't get caught and it wouldn't come back to bite them. Next thing you know the whole mess implodes and even if none of them get "caught" they've managed to do some serious damage to the economy.

Remember a point from the movie. The homes people were building with his lonas cost 1/2 what they were worth.

@JohnMc: know thy customer-DEAD ON .

Too many didn't KNOW squat in this mess .They didn't know the customer but they didn't care to know the customer .The banks didn't even know what their fellow banks were selling ,it was just business with another corporation or institution .

A true business-customer relationship between the financial entities would have revealed alot more about the true nature of these loans and this whole thing would've been stopped dead in it's tracks .

Even though there was buying and selling the whole thing was based on business between two corporations and not a business and a CUSTOMER .

Now, the charity knew that the money was not theirs, but neglected to point out the mistake to the city and spent the money. Eventually the city figured it out, and the head of the charity went to jail. It was a mistake, Potter knew it, and should have been prosecuted. But in the movie they never did find out what happened to the money.

The George Baileys of this world are dead, and WE KILLED THEM.
One thing that makes this argument a moot point is that while George trusted people to pay their debts, it seems like most people did. Try this today, and I am sure you would have half the people just skip town and never pay, another third pay whenever they got around to it, and the small remainder actually pay their debts as agreed.

Capitalism, and Democracy in general are dying because it relies on people to do the right thing. Earning an honest living, and paying your debts, not robbing, cheating, or stealing. This simple idea has become not only unpopular, but even worse- uncommon. This is by no means limited to the general populace.

Companies which scam, and cheat their customers survive because we collectively allow them to. Like it or not, mob rules. When you patronize a business that cheats their customers you are just as complicit as the scumbag CEOs running it.

Think about it. Why should the place I buy my groceries, or tires, or hardware have paid lobbyists? How many companies out there are we allowing to take advantage of us because we use their services? The problem is us.

In no way did he have the right idea. Bailed got f*cked by circumstance but Potter's financial model was horrible for everyone but him.

Today we wish to have a computer or at least a set of rules decide things. Background checks, drug tests, credit checks. But we don't ask why, worry about false positives, or anything else. We have replaced honor and integrity with computer models - for things beyond creditworthiness. And the mechanical gods have failed.

And also remember, under the rules, the Building and Loan had 60 days to pay withdrawals. George paying them on demand was above and beyond. And he used his own money that was wedding gifts...

And also remember, when the building and loan was endangered BY A CORRUPT BANK (remember Potter had the lost deposit, knew what it was, and pocketed it for himself like banks today with the bail-out), the people who were helped by the Bailey Building and Loan came to his aid.

I think emotional intelligence can tell a person a lot about those things, to a degree. Of course, you also need the hard numbers to back up your hunches, but intuition probably will hint at most of the social aspects.

Of course, this could just show poor accounting on Baily's part rather than laziness, assuming this does lead to a subprime mortgage crisis. The fact he knows thees people personally seems to show he knows more than the average mortgage broker, though. He probably understands their jobs, their work ethic, a rough idea of their fiscal earnings, so he knows more than most subprime mortgage loaners knew in the late stages.

My favorite is probably the Rupert Murdoch one from Fry and Laurie.

It's a wonderful feel-good story, but Bailey's Building and Loan would collapse pretty quickly using those business models.

Pottersville FTW!!

Don't forget that Potter also stole the bank deposit...

Before we canonize Potter, didn't he pocket $8,000 that wasn't his? If he's not Scrooge, he's Madoff.

He was nasty to the teacher because his life was basically ruined at that point. No, the teacher didn't deserve it, but the stress had been building for the entire movie, and losing the money was the breaking point for him.

And no, George was not a sub-prime lender. He actually knew the people he was lending to, and knew they would pay back the loans.

I don't know about you, but I always was offended that crazy senile old Uncle Billy was able to lose all that money...what a way to run a bank! And George Bailey was an old crab anyway - remember how he yelled at that teacher because his kid got a sniffle or something? What a nasty creep. Never liked that movie and could never figured out how it evoked the holiday spirit.

certainly that, but also if the computer said no, the data was manipulated in such a way to make sure it said yes the second time. this is how mcdonald's workers making minimum wage became restaurateurs with a stated salary of $180,000/year - plenty to afford that new 6000 sq ft estate.

@JohnMc:

And if the computer said no, you futzed with it until it said yes.

One of the principal reasons for the Housing bust has been that it did not matter that you knew the customer. The originating bank was going to sell the note off anyway and hedge their bets with CDS paper. So the condition of the customer did not matter so long as the computer said yes.

@nicemarmot617: thank you for your voice of reason. sub-prime lending has a place in society. abuse of sub-prime lending does not.

Instead, his whole business depended on making as few bad loans as possible. He wouldn't let a part-time janitor buy a half-million dollar house. He had an incentive to work with borrowers in trouble instead of foreclose, because he didn't want to live in a town with derelict houses and homeless families.

I should know, I just watched it last night :-)

"The core idea is that the natural reality of sound credit is that it is not transactional but social."

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Ooopss...I should have read that more carefully. The article did say he was a Scrooge. My bad.

Bailey wants to give out a loan to the self-employed guy because he genuinely believes the self-employed guy will be able to pay it back. That's the point of a sub-prime loan. Potter is worried that Bailey is too willing to accept the risk without the documentation. From a risk-minimizing position, he is correct.

However, there's a big difference between giving a loan to someone you know, and giving a loan to people with falsified documentation, or approving a loan for someone who really can't pay it back. I don't think George Bailey would have given the taxi driver the loan if he didn't think the cabbie could pay it back. That's what the banks have been doing for the last five years.

Perhaps Mr. Potter was BOTH a heartless scrooge and a voice of sanity. It doesn't necessarily make his message useless, just a little lacking in moral authority.

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