It's A Wonderful Life: The Savings And Loan Crisis

The Roaring Twenties and The Savings and Loan Crisis

The movie It's A Wonderful Life starts off in the town of Bedford Falls in the time period just prior to the Great Depression. (I will discuss the Great Depression in more detail in a later essay). It is a prosperous time-the "Roaring Twenties." Many people have invested money in the stock market and are earning quite a bit of money, there are many parties had by all with music, food and drinks, and good company and fun. There are also an abundance of inventions (such as the radio) being introduced into the economy. Furthermore, more people are able to afford such luxuries as telephones, electricity, transportation, etc… During this time, in general, a lot of exchange seems to

Potter himself represents the concept of a monopolist. He almost has a complete monopoly over the rental housing, except for the fact that George's operation provides an alternative choice to having to rent a house. People are able to borrow money from George and his institution and build a house of their own if they want to. Mr. Potter tries incessantly, yet without success, throughout the movie to acquire the position of a complete monopoly over everything. He is trying to become the "feudal lord" as he already has power over the banks and many other aspects of the town. He is trying to break the competition that exists between the bank and the Buildings and Loan so that he can then have complete power over the citizens and what they are able to do, the prices, etc… With the competition still in place, still existing, a complete monopoly cannot be obtained, and thus he cannot acquire compete control. Mr. Potter desires that all the citizens of the town be completely dependent on him, to abide by his laws, and to essentially have no choices. This would of course make Mr. Potter ever more powerful and ever more

Rather, deregulation led to opportunities which in turn altered peoples' incentives. It was the mindset and incentives of people which ultimately led to numerous failures. Although not discussed in detail, the incentives of all the people involved played a big part in the severity of the thrift crisis, not only the incentives of the thrift managers. Politicians, regulators, brokers, other investors, etc… all had incentives of their own as well. They ignored signals of insolvency and tired to postpone the "day of reckoning" until someone else took over and became responsible. They didn't want to be the "bad guys." They also wanted to maintain public confidence in the nation's financial system and avoid causing a big