Thanks for a characteristically informative text, but I believe that the bank run in "It's a Wonderful Life" did date to the 1930s--George came to the bank rather than leave on his honeymoon. The main narrative of the film, which takes place after the war, was later--he and his wife had three children.
If you re-watch the film and do a little math based on when George has to take over Bailey Brothers, the run would have to have taken place no later than late 1932, well before FDR took office and introduced bank protections.
Yes, that run took place much earlier. Krugman is mistaking that for the crisis George faces later with the upcoming bank examiner audit, because Potter basically steals the $8K Uncle Billy was about to deposit in Potter's bank (never understood why he was depositing it in a rival institution?).
Potter's bank would have handled much more cash; Bailey Building and Loan may not even have had a vault. The money would have been more secure there (in addition, the Baileys may have earned a bit of interest on the deposit).
As a national bank Potter's bank would have been a Federal Reserve member, and as such would have had an account there where they would have obtained cash. Bailey's B&L was not a Fed member. Pretty much everybody in Bedford Falls needing a large sum of cash would have had to get it from First National, and that included Bailey B&L.
This is the sort of things one learns from a long Fed career. In my case, st the NY Fed, in fact--which is the district Bedford Falls is in, assuming it is really Seneca Falls, as is generally believed. However, Mr. Potter was never a member of the NY Fed's Board of Directors (there is always, by law, somebody from a small bank on the board of a regional Fed).
What kind of people would want to get rid of any agency in charge of catching white-collar criminals?
We know who those people are. Yet not enough of us had the common sense to suss that out and vote accordingly. How did so many people on the left get convinced to sit out this particular election or vote against their own interests on the promise, the second time around, that only a certain person can fix an economy that doesn't need these particular fixes?
There is a lot of blame to go around. Especially in the media for prioritizing certain types of news over others and not taking care to ensure that a maximum of people have access to real news and useful analysis. Project 2025 has been out there and it was published and covered, but only some things were highlighted for voters.
Former CNN media analyst, Oliver Darcy, recently quit his job to devote his attention to the goings on in the media. In the short time he's had his shingle up on this platform, Oliver has managed to put out three major scoops on Patrick Soon-Shiong of the LA Times and the goings on at WaPo.
The thinning out of the ranks of journalists has been a thing since the early 2010s when right-wing moneyed interests started buying up media in the middle of the country at first, then elsewhere. Now, the situation is so much worse that the oligarch owners have no shame in coming right out and showing us what they really think.
Then, there are the paywalls. There is no free internet library where you can sit and read a copy of the paper.
This is a big problem.
As nice as this and other platforms are, they are no substitute for a free press. Moreover, each and every one of us cannot possibly support a sufficient number of journalists or small journalist organizations that, in the end, do not have the resources to cover the news in full. This upsets me especially as I can see the onslaught that is coming and know media coverage will be less than full.
Last time around, there were bright spots. One journalist in particular, Danny Vinik, formerly of Politico, did a tremendous job of covering what Trump's nominees did at their respective agencies. Danny left journalism entirely a couple of years ago. Will Politico restart his work? Just based on who owns it, I doubt it.
These things, in great part, are what has made it so easy for the robber barons to achieve their goals...
Right on. Thank you for this invitation to see, really see, what is and has been going on. It's a bloody calculated mess...we are all expected to accept. The thieve barons never left. They only march forward. Hello Peter Thiel.
At least in Hartford CT where I live there is a "free internet library where you can sit and read a copy of the paper." Our public library provides free access to lots of papers from many years back right up to the current edition not only if you go to the library but also from your home. For the New York Times the access is to all editions from 1985 to today. For the Hartford Courant it is all editions from 1764 (it's the longest continuously published paper in the U.S.) All you need is a public library card and as long as you have proof of your residence in the city you can even get the card without leaving home. Other papers included are the Chicago Tribune, the Los Angeles Times, the Wall Street Journal and the Washington Post.
Some library systems are much better than others, granted.
People just don't use the library the way they used to, say, twenty five years ago? Young people get their news completely differently than old fogies like me.
The advent of marketing emails, email newsletters (from various sources, news and non-news) and then the social media revolution, all have done much to completely change the way we are informed. This applies equally to the young as it does everyone else. The 2020 election laid bare just how vulnerable certain age groups are to propaganda.
Broadcast news and cable are undergoing significant changes now and one wonders if they will find a way to survive. First it was CNN's David Zaslaw who, through Chris Licht, made institutional bothsiderism a tenet of the network. Now, with a new boss at NBC/MSNBC who is said to be openly wishing the network was more tilted to the right, who knows how much lower the ratings at MSNBC will go and what that will trigger. Print media is undergoing its own upheavals. WaPo, LA Times are in the spotlight right now but they've hardly been the only ones with ownership meddling issues.
When you see well-respected journalists and opinion writers leaving on their own, you KNOW something is up. I highly recommend finding Oliver Darcy here. I will do my part and resume documenting policy changes at the government agency level and in Congress over the next four years.
Democracy does die in darkness. We are in a thick fog right now.
I don't think it is new or that it is limited to certain publications. What is new is the radical nature of what is being done along with the openness with which ownership is discussing what it intends to do.
Yes, I am lucky to have access to libraries that provide free access to newspapers and magazines online. Not everything but enough to supplement the few people I follow online.
Interesting local experiment occurred in my neck of the woods. We have a real independent local newspaper. It's great. It's impossible to tell if it's conservative or liberal.
This is a very MAGA, Christian Nationalist area. They've taken over the Republican party with extremists who shut down the University Extensions who ran 4-H, Master Gardeners and other community ed programs. They tried hard to kill the public library, even after the public voted in a special assessment district. They voted down an offer to buy 240 acres of public land for 2.3 million that would then be given to the BLM for a public recreation area...that's instead of logging it. (Have your cake and eat it to)
There was a recall of one of the county commissioners. He was recalled by 60%. I think that was because it was a special election and the people who voted are the people who read the paper and know about local politics. In the general election, voters went for the Republican recommendations, who are more of the MAGA extremists. But that included all the people who know exactly nothing about what's going on in the county.
The short form answer to your original question (“What kind of people would want to get rid of any agency in charge of catching white-collar criminals?”) is pretty straightforward. White collar criminals.
While I would never challenge his economic judgements, as a huge movie buff, and a huge fan of It's a Wonderful Life in particular, I have to point out that Mr. Krugman has made a number of factual errors about the plot of that movie. Yes, the "present day" portion of IAWL takes place on Christmas Eve 1945 (not 1946), but the bank run takes place in one of the flashbacks that make up the bulk of the movie and it occurred early in the Depression (approximately 1932) and clearly predates all the New Deal banking reforms. The events in the 1945 segment of the film do not turn on the bank run but on the loss of $8,000 that would cause a major shortfall in the books of the Bailey Brothers Building & Loan (which in typical movie coincidence was being scrutinized by a bank examiner on that Christmas Eve).
As a retired history and economics teacher, I used the "It's a Wonderful Life" bank run scene every year for instruction. I pointed out the imagery in the bank office where George and his Uncle Billy meet to discuss the dire situation. On the wall is a photo of Herbert Hoover, who was president until March 1933. So, the scene probably takes place in 1932 or early 1933. (I also point out the bust of Napoleon that rests in "Old Man" Potter's office.)
Well, that's the hard way. There's a much easier way to approximate the year. In the last segment of the movie, featuring the 1928 high school graduation dance, Mary and brother Harry (with George's college money) were going off to college. The next segment (including George's marriage to Mary and the bank run) begins with them coming home to Bedford Falls after graduating. So, 1928 + four years of college = 1932. And IIRC there's also narration from the angels that George got four years older waiting for Harry to return from college and take over the Building & Loan. (BTW, that makes Harry awfully long in the tooth to be a WWII fighter pilot a dozen years later, but it's the movies.)
Banks are deregulated and protected enough. While working in private wealth management in 2008, I watched my bank happily restructure home mortgages for the wealthy while tossing regular customers' appeals who were not in arrears in the circular file. Duh! The game is rigged.
Great economist. Poor movie critic. The whole narrative of the film is the account of George Bailey's life leading up to the climactic events that take place the day his heroic brother is to arrive home after receiving the Medal of Honor from President Truman. The bank run occurs on the day George and Mary get married; by the end they have four kids. Look closely: In the earlier scenes you'll see a photo of Herbert Hoover on the wall of the Bailey Bros. Building and Loan. And by the way, it's a magnificent work of art, a portrait of a man confronting profound despair - not something to be dismissed as a tired hack job one is forced to watch because nothing else is on.
One point missed here is that the FDIC is an insurance company. Its insurance premiums are paid by individual banks not by the taxpayers. If anything deposit premiums are incorporated as lower rates to depositors who seem to value the insurance feature.
Therefore, the FDIC's Deposit Insurance Fund (DIF) and ALL the FDIC expenses are paid for by individual banks who have deposit insurance.
The bank is the policy holder, the FDIC is the insurance company, and DIF is the pool of insurance reserves in case of bank failure. The FDIC's other activities like bank supervision and examination exist solely to protect the soundness of the DIF.
So shutting down the FDIC won't have any effect at all on the US budget or its deficit. Moving the FDIC to the Treasury Dept. won't create any efficiencies either.
One could argue that eliminating the FDIC might save banks a little bit of money which they might pass on to consumers, but at the moment premiums are 5 -32 basis points, and bank net interest margins are typically 250-400 basis points.
So deposit insurance premiums are small enough that depositors aren't even aware of the cost but strongly value the insurance feature.
What we saw last year with the SVB bank run was that even oligarchs (e.g. Peter Thiel) value deposit insurance when their money is at risk. While generally deposit insurance maxes out at $250,000, but when a bank is deemed "Systemically Important" deposit insurance ceilings can be dispensed with.
That is what Thiel and his Silicon Valley buddies badgered the FDIC about in early March 2023 and were successful in: (a) getting SVB named "Systemically Important" and (b) thereby getting unlimited deposit insurance coverage.
I’m a retired CPA, and thinking of the ‘80s, I remember the problems in the banking industry. Most of my bank clients had national charters, but I did have one with a state charter. I noticed that “savings and loan” entities, who legally couldn’t use the word Bank (with a K) in their names were changing their names to X Banc to try to distance themselves from the S & L crisis. Without the current laws, generated by the experiences of the ‘80s and 2008, we will see all sorts of pop up “banking”, including bitcoin operations, which will plunge us back into those times.
1. The banking part of IAWL was painfully accurate. The folk who made the film seemed to pay as much attention to banking authenticity as they usually do to clothes and cars.
2. [Much more important.] It's no accident that the Trumpies want to fold the FDIC into Treasury rather than fold the OCC into the FDIC. I lived through the financial crisis of '08. Pound per pound, the FDIC was easily the most effective and innovative agency. The Fed was the most important, but they were and are an 800-pound gorilla in regulation space. The FDIC was way ahead on panache. The OCC did--nothing.
One characteristic of many MAGA and republican actions is that they inhibit departments of the federal government from doing what they are charged by law to do. If there are changes to the FDIC, as I understand it, the FDIC or federal treasury would still insure bank deposits to some amount. But they would not have the power and regulations to actually make banks act responsibly. The FDIC, under GOP proposals would not have the power to regulate banks but would be responsible if there is a panic. Another case of when there are profits, we practice free enterprise, but when there are loses, we are all socialists.
With the misguided and increasing interest in having banks involved with crypto, this is something that makes me think nothing good will happen. One thing that escapes a lot of attention is the need for non-profit foundations to maintain bank accounts much greater than the FDIC deposit guarantee. I serve on one such foundation board and we have both payroll and capital needs that require significant bank deposits. I was concerned when Silicon Valley Bank failed and we contacted our regional bank regarding any issues they might have had. Our foundation is not in a position to maintain multiple "insured" accounts and need assurance that our funds are not in jeopardy.
The banking regulatory system is in need of overhaul and maybe the work of Anat Admati (see "The Banker's New Clothes" for a good elaboration) can serve as a template. It's important to remember that in addition to protecting individual depositors, the needs of businesses and foundations need also to be protected.
Thanks to the Good Professor for that good article. The MAGA and right-wing crowd exhibit ignorance and arrogance. They don't know that regulations and laws are there for a reason. Sometimes there is over regulation, but mostly it is for the good of the industry and society.
Why do they have to keep learning the same lessons? Of course, Donald wants to cash in now and to heck with the future.
I came here to correct the mistake about the bank run scene in IAWL, but since several people have already done so, I will just note that it's a crying shame that that Desmond Hurst's wonderful A Christmas Carol (with Alastair Sim as Scrooge) is not on TV every Christmas. Even TCM just has the vastly inferior version from 1938. At least I have the old VCI Blu Ray.
On movies related to the OP, I recommend Margin Call, an under-seen gem (recommended to me by a family member who worked in that sector).
FWIW, each Christmas Eve I watch Alastair Sim's A Christmas Carol (actually entitled "Scrooge"--look at the title card in the film--though no one calls it that) followed by IAWL. I have that old Blu-ray also; unfortunately, the video quality is pretty bad (though IAWL on 4K/HDR disc looks absolutely terrific). That version is easily the best of the myriad versions of the Dickens story (and I've seen plenty, even the Muppets) and Sim is simply wonderful--he ruins every other Scrooge for me. Well, except Bill Murray in Scrooged, a movie whose reputation has gotten deservedly better over the years.
Strangely, while Alastair Sim was a very popular stage and film actor in the UK, very little of his other work is well known in the US (which probably helps his disappearing into the Scrooge role for us Yanks). Even this movie buff has not seen Sim in anything else. The closest I've come is The Ladykillers, where Alec Guinness, complete with prosthetic teeth, based his performance on Sim.
Maybe my British upbringing means that I saw a lot more movies with Alistair Sim, especially the Ealing comedies. His filmography is here: https://www.imdb.com/name/nm0799237/
Sim was in Hitchcock's Stage Fright, and for Brit noir fans he was in Green for Danger and An Inspector Calls. He is probably most famous in the UK for the Belles of St Trinians films. He also has a cameo in the under-rated Rogue Male (one of Peter O'Toole's best films).
The theory I've heard of The Ladykillers was that it was an Ealing satire of the Atlee government, with Alec Guinness playing a parody of Atlee. Certainly there is more than a hint of Sim in the portrayal.
I've heard of most of those movies but, unfortunately, haven't seen any of them though I've seen plenty of British films of that general era. (Though I am embarrassed to admit that I've neither seen nor am familiar with Stage Fright though I've seen almost all of Hitchcock's films, including many of the pre-Hollywood British ones.)
I haven't heard of The Ladykillers being a political satire, but even if accurate, I think that the bit about Guinness is just plain wrong. I've read in multiple places that Guinness flatly stated that he based that performance on Sim and that seems amply substantiated by the performance, the wig and the fake teeth. I've also read (though I can't vouch for its accuracy) that the part was written with Sim in mind but he wasn't available and for that reason Guinness was initially reluctant to take the part.
Thanks for a characteristically informative text, but I believe that the bank run in "It's a Wonderful Life" did date to the 1930s--George came to the bank rather than leave on his honeymoon. The main narrative of the film, which takes place after the war, was later--he and his wife had three children.
Yes, the run takes place during the Depression.
If you re-watch the film and do a little math based on when George has to take over Bailey Brothers, the run would have to have taken place no later than late 1932, well before FDR took office and introduced bank protections.
Thank you!
This movie spans about 25 years and puts the bank run in a historically accurate place.
I still love you Mr. Krugman…
:)
Yes, that run took place much earlier. Krugman is mistaking that for the crisis George faces later with the upcoming bank examiner audit, because Potter basically steals the $8K Uncle Billy was about to deposit in Potter's bank (never understood why he was depositing it in a rival institution?).
Potter's bank would have handled much more cash; Bailey Building and Loan may not even have had a vault. The money would have been more secure there (in addition, the Baileys may have earned a bit of interest on the deposit).
As a national bank Potter's bank would have been a Federal Reserve member, and as such would have had an account there where they would have obtained cash. Bailey's B&L was not a Fed member. Pretty much everybody in Bedford Falls needing a large sum of cash would have had to get it from First National, and that included Bailey B&L.
This is the sort of things one learns from a long Fed career. In my case, st the NY Fed, in fact--which is the district Bedford Falls is in, assuming it is really Seneca Falls, as is generally believed. However, Mr. Potter was never a member of the NY Fed's Board of Directors (there is always, by law, somebody from a small bank on the board of a regional Fed).
I wish I’d read your comment before posting my own. Live and learn.
What kind of people would want to get rid of any agency in charge of catching white-collar criminals?
We know who those people are. Yet not enough of us had the common sense to suss that out and vote accordingly. How did so many people on the left get convinced to sit out this particular election or vote against their own interests on the promise, the second time around, that only a certain person can fix an economy that doesn't need these particular fixes?
There is a lot of blame to go around. Especially in the media for prioritizing certain types of news over others and not taking care to ensure that a maximum of people have access to real news and useful analysis. Project 2025 has been out there and it was published and covered, but only some things were highlighted for voters.
Former CNN media analyst, Oliver Darcy, recently quit his job to devote his attention to the goings on in the media. In the short time he's had his shingle up on this platform, Oliver has managed to put out three major scoops on Patrick Soon-Shiong of the LA Times and the goings on at WaPo.
The thinning out of the ranks of journalists has been a thing since the early 2010s when right-wing moneyed interests started buying up media in the middle of the country at first, then elsewhere. Now, the situation is so much worse that the oligarch owners have no shame in coming right out and showing us what they really think.
Then, there are the paywalls. There is no free internet library where you can sit and read a copy of the paper.
This is a big problem.
As nice as this and other platforms are, they are no substitute for a free press. Moreover, each and every one of us cannot possibly support a sufficient number of journalists or small journalist organizations that, in the end, do not have the resources to cover the news in full. This upsets me especially as I can see the onslaught that is coming and know media coverage will be less than full.
Last time around, there were bright spots. One journalist in particular, Danny Vinik, formerly of Politico, did a tremendous job of covering what Trump's nominees did at their respective agencies. Danny left journalism entirely a couple of years ago. Will Politico restart his work? Just based on who owns it, I doubt it.
These things, in great part, are what has made it so easy for the robber barons to achieve their goals...
Right on. Thank you for this invitation to see, really see, what is and has been going on. It's a bloody calculated mess...we are all expected to accept. The thieve barons never left. They only march forward. Hello Peter Thiel.
At least in Hartford CT where I live there is a "free internet library where you can sit and read a copy of the paper." Our public library provides free access to lots of papers from many years back right up to the current edition not only if you go to the library but also from your home. For the New York Times the access is to all editions from 1985 to today. For the Hartford Courant it is all editions from 1764 (it's the longest continuously published paper in the U.S.) All you need is a public library card and as long as you have proof of your residence in the city you can even get the card without leaving home. Other papers included are the Chicago Tribune, the Los Angeles Times, the Wall Street Journal and the Washington Post.
Some library systems are much better than others, granted.
People just don't use the library the way they used to, say, twenty five years ago? Young people get their news completely differently than old fogies like me.
The advent of marketing emails, email newsletters (from various sources, news and non-news) and then the social media revolution, all have done much to completely change the way we are informed. This applies equally to the young as it does everyone else. The 2020 election laid bare just how vulnerable certain age groups are to propaganda.
Broadcast news and cable are undergoing significant changes now and one wonders if they will find a way to survive. First it was CNN's David Zaslaw who, through Chris Licht, made institutional bothsiderism a tenet of the network. Now, with a new boss at NBC/MSNBC who is said to be openly wishing the network was more tilted to the right, who knows how much lower the ratings at MSNBC will go and what that will trigger. Print media is undergoing its own upheavals. WaPo, LA Times are in the spotlight right now but they've hardly been the only ones with ownership meddling issues.
When you see well-respected journalists and opinion writers leaving on their own, you KNOW something is up. I highly recommend finding Oliver Darcy here. I will do my part and resume documenting policy changes at the government agency level and in Congress over the next four years.
Democracy does die in darkness. We are in a thick fog right now.
You think ownership meddling is something new? Time to watch "Citizen Kane" again.
I don't think it is new or that it is limited to certain publications. What is new is the radical nature of what is being done along with the openness with which ownership is discussing what it intends to do.
Yes, I am lucky to have access to libraries that provide free access to newspapers and magazines online. Not everything but enough to supplement the few people I follow online.
Interesting local experiment occurred in my neck of the woods. We have a real independent local newspaper. It's great. It's impossible to tell if it's conservative or liberal.
This is a very MAGA, Christian Nationalist area. They've taken over the Republican party with extremists who shut down the University Extensions who ran 4-H, Master Gardeners and other community ed programs. They tried hard to kill the public library, even after the public voted in a special assessment district. They voted down an offer to buy 240 acres of public land for 2.3 million that would then be given to the BLM for a public recreation area...that's instead of logging it. (Have your cake and eat it to)
There was a recall of one of the county commissioners. He was recalled by 60%. I think that was because it was a special election and the people who voted are the people who read the paper and know about local politics. In the general election, voters went for the Republican recommendations, who are more of the MAGA extremists. But that included all the people who know exactly nothing about what's going on in the county.
The short form answer to your original question (“What kind of people would want to get rid of any agency in charge of catching white-collar criminals?”) is pretty straightforward. White collar criminals.
Of course! It was a rhetorical question.
:) yep. But it was fun to state the answer anyway
By the way, Paul, one of my first jobs after college was at the long defunct Thrift Depositor Oversight Board...
Thanks for bringing your brand of historic knowledge and perspective to substack! Every read thus far is a treasure.
While I would never challenge his economic judgements, as a huge movie buff, and a huge fan of It's a Wonderful Life in particular, I have to point out that Mr. Krugman has made a number of factual errors about the plot of that movie. Yes, the "present day" portion of IAWL takes place on Christmas Eve 1945 (not 1946), but the bank run takes place in one of the flashbacks that make up the bulk of the movie and it occurred early in the Depression (approximately 1932) and clearly predates all the New Deal banking reforms. The events in the 1945 segment of the film do not turn on the bank run but on the loss of $8,000 that would cause a major shortfall in the books of the Bailey Brothers Building & Loan (which in typical movie coincidence was being scrutinized by a bank examiner on that Christmas Eve).
As a retired history and economics teacher, I used the "It's a Wonderful Life" bank run scene every year for instruction. I pointed out the imagery in the bank office where George and his Uncle Billy meet to discuss the dire situation. On the wall is a photo of Herbert Hoover, who was president until March 1933. So, the scene probably takes place in 1932 or early 1933. (I also point out the bust of Napoleon that rests in "Old Man" Potter's office.)
Well, that's the hard way. There's a much easier way to approximate the year. In the last segment of the movie, featuring the 1928 high school graduation dance, Mary and brother Harry (with George's college money) were going off to college. The next segment (including George's marriage to Mary and the bank run) begins with them coming home to Bedford Falls after graduating. So, 1928 + four years of college = 1932. And IIRC there's also narration from the angels that George got four years older waiting for Harry to return from college and take over the Building & Loan. (BTW, that makes Harry awfully long in the tooth to be a WWII fighter pilot a dozen years later, but it's the movies.)
Banks are deregulated and protected enough. While working in private wealth management in 2008, I watched my bank happily restructure home mortgages for the wealthy while tossing regular customers' appeals who were not in arrears in the circular file. Duh! The game is rigged.
Great economist. Poor movie critic. The whole narrative of the film is the account of George Bailey's life leading up to the climactic events that take place the day his heroic brother is to arrive home after receiving the Medal of Honor from President Truman. The bank run occurs on the day George and Mary get married; by the end they have four kids. Look closely: In the earlier scenes you'll see a photo of Herbert Hoover on the wall of the Bailey Bros. Building and Loan. And by the way, it's a magnificent work of art, a portrait of a man confronting profound despair - not something to be dismissed as a tired hack job one is forced to watch because nothing else is on.
“Those who cannot remember the past are condemned to repeat it” - George Santayana.
Related: Those who cannot remember the plot of "It's a Wonderful Life" ar condemned to be fact-checked by readers.
and George Santayana's smarter older brother:
"Those who remember the mistakes of history are condemned to watch them repeated by those who don't."
One point missed here is that the FDIC is an insurance company. Its insurance premiums are paid by individual banks not by the taxpayers. If anything deposit premiums are incorporated as lower rates to depositors who seem to value the insurance feature.
Therefore, the FDIC's Deposit Insurance Fund (DIF) and ALL the FDIC expenses are paid for by individual banks who have deposit insurance.
The bank is the policy holder, the FDIC is the insurance company, and DIF is the pool of insurance reserves in case of bank failure. The FDIC's other activities like bank supervision and examination exist solely to protect the soundness of the DIF.
So shutting down the FDIC won't have any effect at all on the US budget or its deficit. Moving the FDIC to the Treasury Dept. won't create any efficiencies either.
One could argue that eliminating the FDIC might save banks a little bit of money which they might pass on to consumers, but at the moment premiums are 5 -32 basis points, and bank net interest margins are typically 250-400 basis points.
So deposit insurance premiums are small enough that depositors aren't even aware of the cost but strongly value the insurance feature.
What we saw last year with the SVB bank run was that even oligarchs (e.g. Peter Thiel) value deposit insurance when their money is at risk. While generally deposit insurance maxes out at $250,000, but when a bank is deemed "Systemically Important" deposit insurance ceilings can be dispensed with.
That is what Thiel and his Silicon Valley buddies badgered the FDIC about in early March 2023 and were successful in: (a) getting SVB named "Systemically Important" and (b) thereby getting unlimited deposit insurance coverage.
I’m a retired CPA, and thinking of the ‘80s, I remember the problems in the banking industry. Most of my bank clients had national charters, but I did have one with a state charter. I noticed that “savings and loan” entities, who legally couldn’t use the word Bank (with a K) in their names were changing their names to X Banc to try to distance themselves from the S & L crisis. Without the current laws, generated by the experiences of the ‘80s and 2008, we will see all sorts of pop up “banking”, including bitcoin operations, which will plunge us back into those times.
Two things:
1. The banking part of IAWL was painfully accurate. The folk who made the film seemed to pay as much attention to banking authenticity as they usually do to clothes and cars.
2. [Much more important.] It's no accident that the Trumpies want to fold the FDIC into Treasury rather than fold the OCC into the FDIC. I lived through the financial crisis of '08. Pound per pound, the FDIC was easily the most effective and innovative agency. The Fed was the most important, but they were and are an 800-pound gorilla in regulation space. The FDIC was way ahead on panache. The OCC did--nothing.
One characteristic of many MAGA and republican actions is that they inhibit departments of the federal government from doing what they are charged by law to do. If there are changes to the FDIC, as I understand it, the FDIC or federal treasury would still insure bank deposits to some amount. But they would not have the power and regulations to actually make banks act responsibly. The FDIC, under GOP proposals would not have the power to regulate banks but would be responsible if there is a panic. Another case of when there are profits, we practice free enterprise, but when there are loses, we are all socialists.
With the misguided and increasing interest in having banks involved with crypto, this is something that makes me think nothing good will happen. One thing that escapes a lot of attention is the need for non-profit foundations to maintain bank accounts much greater than the FDIC deposit guarantee. I serve on one such foundation board and we have both payroll and capital needs that require significant bank deposits. I was concerned when Silicon Valley Bank failed and we contacted our regional bank regarding any issues they might have had. Our foundation is not in a position to maintain multiple "insured" accounts and need assurance that our funds are not in jeopardy.
The banking regulatory system is in need of overhaul and maybe the work of Anat Admati (see "The Banker's New Clothes" for a good elaboration) can serve as a template. It's important to remember that in addition to protecting individual depositors, the needs of businesses and foundations need also to be protected.
The bank run depicted in It’s A Wonderful Life occurred when young George and Mary had just tied the knot and were about to embark on their honeymoon.
Thanks to the Good Professor for that good article. The MAGA and right-wing crowd exhibit ignorance and arrogance. They don't know that regulations and laws are there for a reason. Sometimes there is over regulation, but mostly it is for the good of the industry and society.
Why do they have to keep learning the same lessons? Of course, Donald wants to cash in now and to heck with the future.
I came here to correct the mistake about the bank run scene in IAWL, but since several people have already done so, I will just note that it's a crying shame that that Desmond Hurst's wonderful A Christmas Carol (with Alastair Sim as Scrooge) is not on TV every Christmas. Even TCM just has the vastly inferior version from 1938. At least I have the old VCI Blu Ray.
On movies related to the OP, I recommend Margin Call, an under-seen gem (recommended to me by a family member who worked in that sector).
FWIW, each Christmas Eve I watch Alastair Sim's A Christmas Carol (actually entitled "Scrooge"--look at the title card in the film--though no one calls it that) followed by IAWL. I have that old Blu-ray also; unfortunately, the video quality is pretty bad (though IAWL on 4K/HDR disc looks absolutely terrific). That version is easily the best of the myriad versions of the Dickens story (and I've seen plenty, even the Muppets) and Sim is simply wonderful--he ruins every other Scrooge for me. Well, except Bill Murray in Scrooged, a movie whose reputation has gotten deservedly better over the years.
Strangely, while Alastair Sim was a very popular stage and film actor in the UK, very little of his other work is well known in the US (which probably helps his disappearing into the Scrooge role for us Yanks). Even this movie buff has not seen Sim in anything else. The closest I've come is The Ladykillers, where Alec Guinness, complete with prosthetic teeth, based his performance on Sim.
Maybe my British upbringing means that I saw a lot more movies with Alistair Sim, especially the Ealing comedies. His filmography is here: https://www.imdb.com/name/nm0799237/
Sim was in Hitchcock's Stage Fright, and for Brit noir fans he was in Green for Danger and An Inspector Calls. He is probably most famous in the UK for the Belles of St Trinians films. He also has a cameo in the under-rated Rogue Male (one of Peter O'Toole's best films).
The theory I've heard of The Ladykillers was that it was an Ealing satire of the Atlee government, with Alec Guinness playing a parody of Atlee. Certainly there is more than a hint of Sim in the portrayal.
I've heard of most of those movies but, unfortunately, haven't seen any of them though I've seen plenty of British films of that general era. (Though I am embarrassed to admit that I've neither seen nor am familiar with Stage Fright though I've seen almost all of Hitchcock's films, including many of the pre-Hollywood British ones.)
I haven't heard of The Ladykillers being a political satire, but even if accurate, I think that the bit about Guinness is just plain wrong. I've read in multiple places that Guinness flatly stated that he based that performance on Sim and that seems amply substantiated by the performance, the wig and the fake teeth. I've also read (though I can't vouch for its accuracy) that the part was written with Sim in mind but he wasn't available and for that reason Guinness was initially reluctant to take the part.
Paul, I'm pleased you decided to carry on your excellent journalism on Substack. I like wonks!