Next Stop, Pottersville?

Banks should consider borrowing a page from the evil banker Mr. Potter in "It's a Wonderful Life."


"Can't you understand what's happening here? Don't you see what's happening? Potter isn't selling. Potter's buying!"

That's the normally laconic George Bailey, of course, addressing a roomful of nervous shareholders at a key moment in It's a Wonderful Life. The town folk have made a classic run on Bailey Building and Loan and are threatening to bolt to the town's big bank, where the evil plutocrat Henry Potter will opportunistically buy their shares at 50 cents on the dollar.

Say this much for Mr. Potter: he was a doer. He saw a chance for growth and he took it, or tried to. If only today's bankers were half so ambitious. Unfortunately, they are neither buying nor selling. They're holding pat, waiting to see what comes next, a potentially self-defeating strategy given the pivotal role they presumably play in making anything happen at all.

Life was simpler in Bedford Falls, of course. George didn't repackage his mortgages and sell them off, and even if he had it was a sure bet that every mortgage holder could be counted on to make the monthly nut.

Yet even that prudence left George perilously vulnerable to a single misstep. Should we, therefore, extend a strong measure of (nonfungible) credit to today's bankers, who must operate amid almost incalculable complexity? Or, in our frustration, direct them to the nearest snow-covered bridge? That's one question we set out to explore in our special section on banking, coordinated by senior editor Vince Ryan (see "The Big Freeze," "The Standoff Continues," "A World of Trouble," and our banking survey).

The special section includes a survey of more than 500 senior finance executives around the world, who widely agree that credit terms are tightening and signs of improvement are sorely lacking. That might prompt more than a few of us to head over to Martini's, were it not for the resiliency and resolve shown by all the CFOs interviewed for these articles. Their actions suggest that, as bad as things may get, we will escape a descent into Pottersville.


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