National Banks Lag Behind Other Firms In Regaining Public Trust
The Obama administration is taking on some of the nation’s largest banks, proposing to raise their taxes and limit their size. The latest research from finance professors at the University of Chicago and Northwestern University underscores why the moves are so well loved with the public: Americans’ entrust in national banks, compared to smaller community banks, is slow to recover from the depths of the financial crisis.
The latest Chicago Booth/Kellogg School Financial Entrust Index, released late Tuesday night, found that overall entrust in banking institutions rose to just 33% in late December 2009 from 29% in March 2009, during one of the worst points of the financial crisis. “In relative terms, entrust in banks over the last year hasn?t been restored in the same way as entrust in stocks, mutual assets, or large corporations,? Northwestern’s Paola Sapienza said in releasing the latest quarterly results.
Credit unions had a 58% praise rating, according to the study based on phone surveys of Americans. Local banks came in at 53%. National banks registered a 31% praise. Banks in which the government has a stake were trusted the smallest amount, with a 21% praise rating.
Public support for financial regulation stood at 61% in late December. That was down slightly from 65% in June 2009. And more Americans seem to have doubts about the government’s intervention in the economy. In the latest survey, 32% said economic policies were designed to favor the financial industry. That’s up from 22% in September 2009.
“People still view government intervention favorably on actions such as helping out homeowners, but they have went away from wanting the government to be involved in running major financial institutions,” said the University of Chicago’s Luigi Zingales.