• Economy

    It’s Not Just Silicon Valley Bank — Americans Haven’t Trusted Banks For Years

    Pollapalooza

    When Silicon Valley Bank collapsed last week, it caused the stock market to begin a five-day drop. The stocks for regional banks, in particular, dropped significantly, even as federal regulators worked to mitigate the fallout. Investors have clearly been spooked by the failure of SVB and Signature Bank, a New York-based institution that also collapsed over the weekend. But Americans haven’t had much confidence in banks and other financial institutions for a while, and most think more regulation is needed.

    Gallup has been polling Americans on their confidence in various institutions — including banks — since before the 1980s. While a majority of Americans once said they had a “great deal” or “quite a lot” of confidence in banks, that changed dramatically after the 2008 financial crisis. In 2007, 41 percent of Americans expressed substantial confidence in banks; by 2009, just 22 percent did. While this level crawled back up to 38 percent in 2020, it has since fallen again and never reached the consistently high levels of the mid-’90s and early 2000s. 

    Similar trends have been captured in other surveys as well: A 2012 paper published in Public Opinion Quarterly found that waning confidence in banks had more to do with major banking scandals than economic events and indicators like recessions or inflation. According to a Pew survey last year, few Americans across the political spectrum believe banks and other financial institutions have “a positive effect on the way things are going in the country these days.”

    And a slightly different but complementary question from Gallup shows Americans not only lack confidence in banks but also tend to have an unfavorable view of them: In a 2022 survey, just 36 percent of Americans said they had a very or somewhat positive view of the banking industry, down from 40 percent the year before. Compare that to the 60 percent of Americans who have a positive view of the restaurant industry, or 57 percent who have a positive view of the farming industry.

    It’s perhaps no surprise, then, that many Americans feel banks ought to be more regulated. A survey from Lake Research Partners/Chesapeake Beach Consulting last October asked Americans about bank regulation and specific policies, finding widespread support across the political spectrum. Sixty-six percent of Americans, including 77 percent of Democrats and 57 percent of Republicans, said there should be more regulation of “financial companies such as Wall Street banks, mortgage lenders, payday lenders, debt collectors and credit card companies.” Over half of Americans said the influence of big banks in Washington is too high. And a majority of Americans supported a number of policy proposals that have been introduced by Congress and regulators, including limiting the size and frequency of bank overdraft and credit card fees, lowering interest rates on high-cost loans and closing loopholes on fintech companies. 

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