In this video, we listen as a CEO of a community bank explains why the government bailout, which gave millions of dollars to United States banks, has not realized the results that the government expected. As noted by a congressional committee, the banks have received over $700 billion in aid, but continue not lending money or aiding the public in refinancing their homes to avoid foreclosure. Instead of creating loans for more customers, which would then stimulate the sorely lagging housing industry, the banks are tightening their qualifications for loans and refinancing mortgages. This has resulted in a continuance of huge numbers of families across the United States losing their homes.
The CEO of Eagle Bank of Maryland, a small community bank, describes a scenario in which the bailout money from the government is not enough. According to him, the amount his bank is currently losing due to customers who withdraw their funds for fear of risk is far higher than the amount of the bailout. The banks cannot make loans until they start regaining deposits from their customers. However, just as during the Great Depression, bank customers fear their bank will go out of business and their money will be gone.