We All Live in Pottersville Now

A 1940s style house in a suburban looking street.

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The classic Capra film, It's a Wonderful Life, is the topic of many articles this year, as a parable for our times. Consumerist asks Was George Bailey Just A Subprime Lender? and the New York Times writes Wonderful? Sorry, George, It’s a Pitiful, Dreadful Life.

We have used the Christmas classic as an analogy a few times, to varying degrees of success.

Two years ago we wrote It's a Wonderful Life. Or is it?, and questioned the wisdom of loaning money to enable Mr. Martini to move from a dense, racially mixed urban neighbourhood to Bailey Park.

Now Mr. Martini has a house in the suburbs and probably has to drive to work at his restaurant. George gives him bread, so he will never know hunger, salt so that life will always have flavour and wine, that joy and prosperity may reign forever. But what about gas?

Commenters loved it, writing "I move to have this absurd and shortsited article removed."

You see? If you shoot pool with some employee here, you can come and borrow money. What does that get us? A discontented, lazy rabble instead of a thrifty working class. And all because a few starry-eyed dreamers like Peter Bailey stir them up and fill their heads with a lot of impossible ideas. Now, I say...

In September, I wrote Fannie, Freddie and the Future of Housing, Innovation and Green Design, suggesting that we all live in Pottersville now. Anyone who wants to borrow money to build green or innovative housing that costs more than the same old conventional junk was going to have trouble now that the appraisers are back in town and you are looking at Mr. Potter instead of George Bailey.

I suggested that we would miss Fannie Mae, founded by Franklin Roosevelt to back mortgages so that working Americans could buy houses. For a long time they carefully and responsibly insured mortgages so that builders could build and buyers could buy without having to pay all cash; banks just weren't big enough to do it on their own in a nation the size of the United States.

"But Tom, your money isn't here, it's in Joe's house and Mrs. Smith's house. That's what banks do!"

The commenters ate it up, writing " this posting is, by far, the most ignorant piece of unsubstantiated, inaccurate garbage that I have ever read.", to which another responded "Welcome to the Lloyd Alter school of journalism."

The criticism hurt. However they made some good points about the lending practices of Fannie Mae and Freddie Mac, and in hindsight I did not make clear that the idea of a Fannie Mae is good, and works very well in other countries where it is prudently managed. (Canada's CMHC is a big promoter of green and sustainable housing as well as the Crown corporation that acts as the mortgage insurer). Perhaps if Lyndon Johnson had not privatized it things might have turned out differently.

However, we need two things in our buildings: Insulation and Innovation. Mr. Potter and the conventional housing and lending industry value neither.