Confidence in US banks remains low while stock prices have mostly held their ground throughout wave after wave of scandal.
According to a new Gallup survey, twenty-six percent of Americans have “a great deal” or “quite a lot” of confidence in US banks. A slightly higher percentage, twenty eight percent, have “very little” confidence in US banks while the bulk of responses, forth three percent, have “some” confidence in the banks. Only two percent say they have no confidence.
The recent polling data is little changed from the previous year despite all the public legal challenges the US banks have encountered over the past year. At one time the line of thinking in the Department of Justice was that aggressively prosecuting the banks for illegal behavior would lead to damaging their reputations and the economy at a whole. This study, and consideration of the stock prices of various banks as criminal scandals have unfolded, seems to largely contradict DoJ’s thinking, highlighted by the public comments http://www.pbs.org/wgbh/pages/frontline/untouchables/ of former Criminal Division chief Lanny Breuer.
US Banks enjoyed confidence levels near 41% before derivatives implosion
In 2007, before the derivatives implosion, US banks enjoyed confidence levels near 41%. Not the 60% confidence level banks enjoyed in 1979, a year in which they ranked number two in confidence just behind organized religion, according to the Gallop Poll.
Confidence in US banks falls to 30% in 1991
“By October 1991, confidence in US banks fell to 30%, likely a result of the Savings and Loan Crisis of the late 1980s, but climbed to 53% by 2004 after almost a decade in the 40% range,” the Gallop report noted. “Confidence in banks stayed relatively high at 49% in 2005 and 2006, but dropped eight percentage points to 41% in 2007, a year in which confidence in nearly all institutions fell. Confidence in US banks fell a combined nineteen points in 2008 and 2009, likely in response to the Great Recession, the collapse of Lehman Brothers bank, and the subsequent government intervention to save several other lending institutions. After bottoming out at 21% in 2012, confidence recovered slightly last year, and remained at that same low level this year.”
While confidence in US banks has dropped, it still ranks in the middle of a list of 17 institutions. Ranking ahead of banks was the military, small business, the police, organized religion, the medical system, the presidency, public schools. Ranking below banks were the healthcare system, the criminal justice system, most forms of media, organized labor, big business and last place, Congress.