They don't. Well, Bailey got the money back, I believe. I take some heat pretty much every Christmas time when I observe, Grinch-like, that Bailey forgot whose money he was playing with. That's actually a little fuzzy in the movie - his firm was founded with his father's money but apparently it was enough of a bank to warrant a bank examiner (and a potential arrest for Bailey). If it was depositors' money then his first ethical duty was to the people who had entrusted him with their life savings and not to the community at large, however much its life was enriched by his misfeasance. If, on the other hand, it was his own, then as far as I'm concerned he can lend it to anyone he likes for any reason he likes. In which case, however, you'd have to wonder why he'd be worried about a bank examiner. Aw, heck, it's a silly Christmas story, just roll with it. Bah. Humbug.
Right as always, Bill.
I confess I cry every year when I watch this movie, but it is typical Capra populist drivel.
I have, however, used JS’s explanation of why his depositor’s money is not physically located in his vault to clarify to my wife why it doesn’t matter which bank our money is deposited with, as long as the bank itself is sound, and FDIC is overseeing it. Of course, if these two circumstances aren’t met, it wouldn’t matter where it is. She just doesn’t grasp the nature of banking.
BTW, I look forward to your analyses each week, and especially so when we get to the chapter containing the real description of what happened in Starnesville. That, and Frisco’s disquisition on money are my favorite parts of the book.
Kirk