Big Regs will create more Mr. Potters

I recently watched the Christmas classic It's A Wonderful Life and pondered on how people may view the villainous Mr. Potter. The character Potter is a wealthy, shrewd banker who preys upon the bottom of the income scale. He applies strict lending standards and isn't forgiving when clients struggle. The character George Bailey in contrast grants loans with a sense of charity. With little thought, it’s easy to liken Mr. Potter to those calling for an end to practices of risky lending via Fannie and Freddie and liken George Bailey to those who don’t. However, this comparison omits something very important. George Bailey’s clients loved him. They scrapped every bit of effort and money they could to make their payments. While big banks in some cases resemble Potter, borrowers of the sub-prime crisis claiming themselves victims of predatory lending do not necessarily measure up to George Bailey’s clients. They had a personal relationship with him, one that more likely stems from small, community banks opposed to big banks. This relates to Stossel’s piece in the following way. John Allison, BB&T’s founder, claims he couldn’t start his bank today with current regulations and that small banks can’t emerge into markets to compete. Mr. Allison does not strike me at all as a Mr. Potter, but his point signals that current regulations will produce more Mr. Potters and less George Baileys.