Where films went wrong – an occasional series – number 94

It’s a wonderful life.

What happened?

On the day of his wedding George Bailey is due to leave Bedford Falls and sees a rush to the bank and the Bailey Building and Loan.  George returns to his office and explains basic banking practice to the customers – persuading some to retain their accounts with the Building and Loan.  The money he had saved for his honeymoon is used to pay out the customers and at day’s end George and his uncle celebrate their solvency as they retain a couple of bank notes.  The worry is over.  George has survived the run on the bank.

What you didn’t see…

The Bedford Falls Evening news runs a report that night that there’s been a run on the bank and the Building and Loan.  They point out that benevolent local Mr Potter has agreed to guarantee the deposits in each to an assured percentage.    CBS, NBC, ABC, CNN, Fox News, the BBC, al-Jazeera, and Sky News show pictures of the run on the Building and Loan and a flustered Uncle Billy entering the Building and Loan and then departing later in the day.  A voiceover explains that stressed Building and Loan staff had to deal with angry customers.  A man comes on to stand in front of graphs and explain that while the Building and Loan is solvent, there is a liquidity issue, but customers shouldn’t worry.  The following morning, the Bedford Falls Daily News runs pictures of the run on the Building and Loan and carries a big picture of George Bailey.  The headline is, “Is the Building and Loan about to go under?” There is a bigger queue of people at the Building and Loan the following day.  Unfortunately, George no longer has any money.  While there is sufficient collateral, and the books indicate the Building and Loan is healthy with various rights to repayment of loans, George has no cash.  He cannot satisfy the new requests for withdrawal.  The bank is closed and won’t lend to the Building and Loan to cover this cashflow difficulty.  George has to contact Mr Potter.  Potter buys the Building and Loan and increases interest rates for George Bailey’s sub-prime borrowers.  

George is screwed and tops himself before Clarence can arrive.

The moral – there is such a thing as bad publicity. 

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About loveandgarbage

I watch the telly and read when not doing law stuff and plugging my decade and a half old unwatched Edinburgh fringe show.
This entry was posted in bloody media, northern rock, people are stupid, Uncategorized, underwritten by bank of england, what more do people want?. Bookmark the permalink.

5 Responses to Where films went wrong – an occasional series – number 94

  1. peeeeeeet says:

    Good thing too. You see, the problem with angels appearing to people to cheer them up is it creates a moral hazard – people will behave recklessly in the knowledge that no matter how bad things get, some dude in white will come along and talk them out of suicide…

  2. Surely the problem is hysterical ignorant journos with an insatiable appetite for easy soundbites and visuals?

  3. judge_death says:

    I thought there was an opening for an LJ entry about It’s A Wonderful Northern Rock. Well done that man.

  4. Anonymous says:

    The difference between Northern Wreck and Bedford Falls Savings and Loan is that BFSL’s loans were all backed by quality assets – ie. the cash money savings of the inhabitants.
    The Wreck’s loans were only about a third backed by its savers’ assets. The rest were backed by borrowing short term on the money markets. When the money markets seized up, the Wreck was in severe danger of being unable to fulfil its obligations to its loanees. This wasn’t just a temporary day to day liquidity blip that some of the other banks had experienced: it was its entire business model falling down about its ears. Anyway, even if you regard the odds of collapse as being very long, when 10% of any savings are at risk above £2000, (to a max of £30000), it quickly becomes very rational to want to move that money elsewhere. It’s similar to what poker players call “pot odds”.
    NR has basically been a basket case ever since the start of the credit crisis in August. It just took until now for the body to stop moving. It can’t go on relying on the B of Eng’s penal interest rates forever otherwise it would definitely go bust!

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