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Investing in Credit Unions Ensures 'It's a Wonderful Life' for working Americans

by Johnny McNulty

For 70 years, American families have gathered to watch Frank Capra’s 1946 holiday classic, It’s A Wonderful Life. The film stars Jimmy Stewart as George Bailey, a man on the brink of suicide who is visited by an angel who saves him by showing George the effect his life (and the credit union he rescued and ran) has had on his small town of Bedford Falls.

The movie celebrates the basic value of human life and contrasts two potential visions of the American economic system: in one, the residents of Bedford Falls can protect and uplift each other through Bailey’s Savings & Loan, and in the other, people are trapped in an inescapable spiral of debt held by the unscrupulous Mr. Potter. Released not long after the Great Depression, the film felt unnervingly prescient in the wake of the Great Recession, when ordinary citizens ended up on the hook for the risky bets of bankers encouraging people they would never meet to take on untenable loans. But what makes the Bailey Savings & Loan such an effective symbol for a more socially beneficial kind of lending?

Jimmy Stewart convinces the depositors of Bailey Savings & Loan not to panic in the 1929 bank crash.

In the world where George Bailey is alive to steer Bailey Savings & Loan — a credit union where neighbors underwrite each others’ mortgages and small loans — through the 1929 bank crash, Bedford Falls is a community of small businesses and homeowners. Their banker is their neighbor (well, so is Mr. Potter, but some neighbors are more neighborly than others) and their peer. He understands their needs and personal circumstances, and is rooting for their success. That’s what sets credit unions apart from banks headquartered in New York, London, or Geneva, far from their clients. In credit unions, historically centered around a common location or profession, lenders live close to and know their clients. The bank also isn’t speculating with depositors’ savings, but instead lending it back directly to the same community. Everyone is invested, literally, in their neighbors’ futures.

This is driven home during George's famous speech where he averts a bank run by telling them where their savings really is. "Your money's in Joe's house...right next to yours. And in the Kennedy house, and Mrs. Macklin's house, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can. Now what are you going to do? Foreclose on them?"

In the alternative world that the angel shows George —the world where George Bailey had never existed, and thus wasn't around to preserve the credit union — Mr. Potter steps in, buying up mortgages with short-term incentives when the townsfolk were most vulnerable. In many ways, this is not unlike big banks offering exploitative mortgage refinance deals or unscrupulous adjustable-rate mortgages. The result, meant to be nightmarish in 1946, is one Americans will find eerily familiar today. A distant banker lets houses fall into foreclosure while main street shops close due to lack of credit, and small town communities fall together into poverty instead of lifting each other up. Everyone becomes a permanent renter with little hope of ever working off their debts.

Even worse, in 2022, many citizens can’t even get access to mainstream banks even if they are willing to pay double-digit credit card interest. And as unscrupulous as national banks may have been in the 2000s, Mr. Potter's behavior bears even more resemblance to that of the predatory lenders who victimize people in poor and remote communities.

To give an extremely short financial history lesson, banks used to be small. Most American banks were limited by law to a single county, with a few states allowing state-wide banking. This meant two things:

1) Small banks in the previous era had to get as much business out of their local county as possible in order to profit.

2) The few big state-wide banks (and banks in financial centers like NYC) had a massive advantage when deregulation arrived, and very quickly there were only a few national banks left, centered in North Carolina, NYC, Boston, and a few other places.

So, in the old system, if you were a small bank in a rural county, you sat down with every potential home buyer and entrepreneur because that was all you could do. In the new world, it's not worth the money for a national bank to keep a branch open or even have an ATM in poor and rural communities. The result are "banking deserts" across the South and deep Midwest. But people need credit. Cars break down, paydays are late, medical bills happen, people want to start businesses or go to school. Who fills this gap? Loan sharks and payday lenders. Even if you do have a national bank account, the only credit available to most people is credit card debt, which is nearly as bad.

Many people lack even that, however, and millions of hardworking Americans are being left out of basic financial instruments like savings accounts. Nothing makes it harder to work your way out of poverty than not having a safe, regulated institution in which to save your money.

If you support the kind of honest capitalism with knowledge about communities and a stake in their account holders’ success, embodied by George Bailey instead of the grim profit-taking of Mr. Potter, consider supporting a community credit union in your end-of year giving.

HOPE Credit Union provides safe deposits and access to credit for the underbanked in the Mississippi Delta region.

In particular, consider supporting HOPE Credit Union. Serving the Mississippi Delta region since 1995, HOPE is as far from a Wall Street bank as the Main Street in Utica, Mississippi, where it began. HOPE was there to support community rebuilding after Hurricane Katrina, and has provided an alternative to the payday lenders eager to exploit the unbanked. HOPE provides access to credit and financial services to people in their communities who dream of opening a business, owning a home or sending their children to college.

The amazing work of HOPE and its CEO, Bill Bynum, has been increasingly recognized in finance and philanthropy, including a $10 million deposit from Netflix. That deposit will go on to generate $100 million for financing for families in banking deserts across the mid-South. You can expect your deposit to make that same kind of transformative 10:1 impact. Investing in your neighbors' houses really does make a difference.

You can donate here, or better yet join the Friends of HOPE network. Learn more about HOPE Credit Union here. There are many other resurgent organizations like it throughout America.

Together with thousands of working Americans across struggling communities in Mississippi, Tennessee, Arkansas and Louisiana, you can help restart the kind of virtuous cycle that America’s credit system once gave its citizens. You don’t have to give people the moon, you just have to give them a chance.

HOPE Credit Union and its founder Bill Bynum are recipients of the John P. McNulty Prize. The McNulty Prize celebrates the boldness and impact of individuals who are using their exceptional leadership abilities, entrepreneurial spirit and private sector talents to address the world’s toughest challenges.

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