The stock market may be near all-time highs. The housing market may be in recovery. And Wall Street has forked over tens of billions to repay the bailouts and settle grievances stemming from the financial crisis.
But Americans still hate the banking industry. A Gallup poll and companion analysis “Why It’s Still Cool to Hate Banks” found that only 28% “have a great deal or quite a lot of confidence in the banks.” Even though that’s up from the 21% nadir in 2012’s poll, it’s well below the 40% average the banking industry held for the past 35 years, Gallup said. And it’s still well below the zenith year of 1979’s 60% rating.
“Few institutions have seen such a steep drop in confidence in recent years,” Gallup said.
Gallup’s Beth Youra notes that 67% of Americans have confidence in small business, but just 21% have confidence in “big business.”
“Banks are often portrayed as the epitome of big business and all its trappings — specifically highly paid executives who are out for profit at all costs,” Youra wrote.
Some of the problem for banks improving their image comes from banking’s lack of sexiness. “Nobody’s paying $12 for a ticket or subscribing to Netflix to watch a movie about someone who did the right thing the first time. But these are some of the real-life examples of ways in which customers have told us that their bank — even some of the ‘big banks’ — provided them with extraordinary, confidence-building experiences,” Youra says.
True. That is a big reason banks have had historically low confidence numbers compared to other industries. On the other hand, 4 million borrowers lost their homes to foreclosure in the financial crisis aftermath. Unemployment soared. People rightly believe that reckless banking was a big reason why.
And much of the public’s resentment is fueling the populist shift in Hillary Clinton’s campaign as well as the grass-roots effort to draft banking scourge Sen. Elizabeth Warren into higher office.
For banks to regain public confidence, Gallup suggests some common sense: treat customers better. A valuable lesson might be the S&L crisis of the late 1980s and early 1990s. Banks, perhaps not in response to the crisis, offered more credit to the public and financed a strong period of economic growth.
Don’t bet on much of a shift anytime soon. Banking is too consolidated. Just four banks; Bank of America Corp. , Citigroup Inc. J.P. Morgan Chase & Co. and Wells Fargo & Co. control more than half of the nation’s assets and deposits. Why would they have any incentive to improve their conduct or services?
The real problem is a lack of competition, not the public’s confidence.
Written by David Weidner of MarketWatch