Summary
We fade from the distressed Michael reeling from Kay's miscarriage to a flashback of Vito watching the infant Fredo wailing out of pain with pneumonia. We see empathy and worry in Vito's face, qualities that, we're starting to notice, are rare in Corleone men. Cut to Vito driving a car as Don Fanucci hops in, demanding a cut of the money Vito and his friends are making off of stolen goods. After Don Fanucci lays out the terms of the protection racket he's proposing for Vito, Vito goes and tells his friends. They mull their options and, ultimately, Vito says he'll reason with Don Fanucci and get him to take less, talking his friends into an agreement it seems like they don't quite understand.
During morning celebrations at a big street festival, Vito meets with his friends to get their share of the money and assures them that he'll get Don Fanucci to agree to his deal. Vito meets with Don Fanucci in a dark restaurant, and offers him $100. At first, Fanucci seems offended, but after Vito offers a half-hearted explanation for coming up short, Fanucci shows his impressed. He says Vito has a lot of balls, and ends up praising him, telling Vito that if he ever needs anything to come see him. On his way out, he says Vito's done well. Vito doesn't seem to take much pleasure from this.
Soon, we are in the middle of the San Rocco festa in the streets of Little Italy. As priests wade through the crowd and an effigy of the saint with dollars bills taped to it is carried through the street, Don Fanucci makes his rounds, greeting the people he so regularly extorts. Vito walks along the rooftops, stalking Don Fanucci from above. Don Fanucci watches a puppet show with knights battling and, ironically, says it's too violent for him and walks away. Vito, on the rooftops, grabs a gun hidden behind a chimney. From the roof, he enters a building—the same building that we see Don Fanucci walk into. Vito unscrews a lightbulb in the stairwell, and after Don Fanucci fiddles with it to make it works, he turns to see Vito clutching something wrapped in towels. It's a gun, and Vito shoots him three times as fireworks go off at the festa. The towel catches fire and Vito snuffs it out.
Back on the rooftops, Vito quickly moves to dispose of the gun. He splits it into many pieces and drops those pieces down the chimneys of several different apartments. He walks down to the street, fireworks going off in every direction, showing him in light for the first time in this entire sequence. Vito joins his wife and small children on the stoop of their brownstone to enjoy the festa happenings. The young Fredo and Connie play with American flags while Vito tells the infant Michael that he loves him very much.
We flash forward to Michael returning to the Nevada compound in the heart of winter. It's quiet and dark, and from the dirty dishes on the table it has the air of having been suddenly abandoned. Michael finds Kay sitting at a sewing machine, but they don't even acknowledge each other. Michael finds his mother and asks if by Vito being strong for the family he ran the risk of losing it—clearly asking his mother if he himself will lose his family. His mother says you can't lose your family. Meanwhile, we see a Senate subcommittee hearing with Frank Pantangeli's right-hand man Willie Cicci, who is admitting to being a hitman for the Corleone family while Senator Geary looks increasingly dismayed.
Flashback again to the old Little Italy days, where Vito is given free oranges by a fruit vendor. He seems genuinely touched, and tells the vendor to come see him if he ever has a problem he needs to solve. Clearly, Vito's reputation is growing. We see his influence grow too, as his wife has him sit down with an old lady who is getting kicked out of her apartment because of complaints about her dog. The old woman begs Vito to talk to the landlord to let her stay, so Vito finds the landlord at a barbershop and insists that he take advanced payment for a rent increase and let the woman keep the dog. The landlord is incensed, but Vito makes him take the money and advises the landlord to ask around the neighborhood about Vito's ability to return a favor. The landlord eventually comes to Vito's office hilariously groveling, and out of sheer terror offers both to let the woman stay and lower her rent by $10. Vito is happy, and he's obviously amused as the landlord scrambles to leave as quickly as possible.
We flash forward once again to Michael testifying in front of the Senate subcommittee. While they are in the middle of questioning Michael about his father's "godfather" moniker, Senator Geary grandstands and makes a speech about the integrity of the Italian people and their importance to America, making for a confusing spectacle that contrasts starkly with the feelings he expressed about Italians earlier in the film. When they get back to questioning, Michael roundly denies his position as the head of the Corleone crime family, his participation in Las Vegas casinos, and his overseeing of gambling and narcotics in New York. He makes a statement challenging the subcommittee to produce any evidence or witnesses that will corroborate charges against him, clearly angry that any such accusation would be made against him and his family. Throughout the statement, we can see Kay sitting behind him, silent but fuming. It's becoming clear that she's had enough of this. Maybe Michael is right to question the security of his family unit.
Analysis
In this segment of the film, we encounter one of the more iconic sequences from The Godfather Part II: Vito's pursuit and murder of Don Fanucci. It's a dense sequence, with Coppola flexing his filmmaking muscle while developing his story with some novelistic touches. Most spectacular, of course, is that juxtaposition of the shooting with the fireworks going off in the street. They provide cover for Don Fanucci's murder—no one can hear the shooting with all that ruckus in the streets—but also heighten the emotional impact of Vito's victory over a petty villain. When so many of the other murders in the film are depicted with a blunt, matter-of-fact, and in turn quite disturbing swiftness, Don Fanucci's death includes all sorts of pyrotechnics, including the make-shift silencer that Vito uses catching fire. It's one of the few times in the movie it seems like Coppola wants us to be cheering for a hit.
The juxtaposition of the festa with this turning point in Vito's crime career is important too. The people celebrating carry an effigy through the streets, as passersby tape dollar bills to it. The man Vito kills has been portrayed as consistently extorting the people in the neighborhood, squeezing these poor working folk dry. When we see Vito's rise after the murder, he is depicted as a man of the people, helping frustrate a slum lord's cruel tactics with a tenant and humbly accepting tribute of some oranges from a fruit vendor. There's an interesting relationship developed here between power, tribute, and money, and Coppola wants to make it clear that Vito is more in line with the saint who the festa celebrates than the brutal, greedy Don Fanucci. He even backlights Vito with fireworks after the murder to inflect him with some glory.
And on the note of those oranges, Coppola's can't avoid indulging in some novelistic flare in this sequence. Early in the festa, we see Don Fanucci go up and grab an orange from a fruit stand as if he owns it. But a little later, again, we see Vito offered a bag of oranges for free by a street vendor. Here, the oranges represent power, and how these two figures of relative power obtain them speaks volumes about their relationship with their neighborhood as well as their security in their respective roosts. Interestingly, we see the oranges come back later, as Michael eats an orange right before his brother Fredo is killed, as everything is collapsing around him. Then, he's alone, and is similarly exacting his power in solitude, for himself.
The seeds of Michael's solitude are planted in this segment of the movie, as Coppola cuts from the flashback timeline of Vito sitting with his family on the stoop enjoying the festa straight to Michael walking into a seemingly empty house in Nevada. We go from a loving depiction of a nuclear family in old Little Italy to the present day sight of Michael wandering through a big, expensive house with only little tokens of his children meeting him, such as a red toy car covered in snow in the front yard. When he finally finds Kay, they don't even acknowledge each other. It's immediately clear that the family life Vito built in those old days has disintegrated under Michael, and through one simple cut from the past to the present, we understand the rise and fall of the Corleone family.