Only One in Five Americans Trust Banks

Advertising Age discussed a Gallup poll of consumer attitudes towards banks, which found distrust at the highest level in decades. Consumers are also on the whole more concerned about big banks than their local brethren.

From Advertising Age (hat tip reader Michael);

Only 21% of consumers polled are confident in U.S. banks, according to a survey taken in late September by Gallup. That marks an unprecedented drop from 40% in mid-July and is the lowest level of consumer confidence in banks in three decades. The 21% low easily beat the previous trough of 30% in October 1991, which occurred amid a major recession, the savings-and-loan crisis and lingering turmoil from the Gulf War.

Rocking that trust further are huge banks getting even bigger — Bank of America swallowing Merrill Lynch, Chase merging with Washington Mutual and Citibank wrestling with Wells Fargo over Wachovia. “It looks like just another manifestation of greed and protecting themselves,” said Alan Siegel, chairman of branding firm Siegel & Gale.

But not all banks are equally feeling the heat, and some local institutions are benefiting.

Unity National Bank in Miami County, Ohio, says it’s getting new customers every day from Chase branches in town. “People are saying they’re just not comfortable there,” said Julie Monnin, Unity’s marketing director. “We haven’t changed anything about the way we do business. … [But] people who before thought that maybe we were too stringent [with loan requirements] are now saying that they see why we are.”

Unity is going out of its way to make sure consumers know it’s solid. It has revamped its website to say so, adding a letter from the bank’s president and an FAQ section. It even posted the home phone numbers of its president and marketing director. It also plans to put a newspaper insert in the local press. “We want [customers] to know we’re doing fine,” Ms. Monnin said.

Gallup’s findings show that while fewer than 25% of consumers trust U.S. banks, a much healthier 66% said they had confidence in the local banks where they do business. Both numbers are down from mid-July, but while national bank confidence dropped from 40%, local bank confidence dropped from 80%.

“What people were saying is … ‘I don’t trust those other bums, [but] I believe in the people at my individual institution,'” said Douglas Berlon, Gallup global practice leader for financial services. “A lot of local banks have positioned themselves as the caregiver — we take care of you and your money,” said Fritz Grutzner, president of branding-strategy firm Brandgarten. “And in times like this, it works to their benefit.”

These findings parallel surveys about politicians, where voters often rate Congress’ performance far lower than that of their own representatives.

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  1. Bob_in_MA

    Of course, 55% of Americans believe the Rapture is coming. Can you buy futures on the Rapture? Maybe, through financial innovation, they could be wrapped into an something the average person could invest in? Like the auction-rate securities market.

    Who needs banks when you can invest in a sure thing?

  2. Anonymous

    Sarcasm aside, even if you rule out the 55% of Americans who believe in the Rapture (cited sources help), you would still be left with a sizable minority (1/4 to 1/3) of Americans who are weary to outright hostile to Wall Street and the large banks.

    I’m sure it make for a good grabbing headline, but I’m not sure how it will translate into anything tangible.

  3. mxq

    Anon 4:05- “I’m pretty sure my local credit union isn’t levered 40:1 and carrying a lot of CDS squared”

    I recall something like $30bn in agency preferreds have been wiped out…this stuff was, unfortunately, pushed on small/local bank and trusts as bulletproof for their capital base. No telling where those holes will pop up, so maybe ask your bank if this applies to them (if they don’t file)…30bn spread across the whole US banking system is in reality pretty minute, but nevertheless, its a new risk consumers didn’t think existed as of a year ago.

  4. Anonymous

    Just wait until they realize that most of the big players are insolvent.

    If Hank really wants to restore trust, why doesn’t he just make all players display their hands through full disclosure of Level 3 assets? It could be done for free, not $700,000,000,000.


  5. Anonymous

    Disclosing their level 3 assets would reveal just how shady banks are at fixing the books. They’d make Enron look like amateurs.

  6. doc holiday

    I think this will be a social trend to distrust global entities, to a point where people will shun capitalism as a norm and look for smaller, regional entities that are close at hand. This is like an absentee landlord letting things go to hell, or allowing crooked pirate mice to play clever little games with future value by putting the future value of Joe’s local money into a distant MBS and then using that for collateral for some derivative bet linked to some other bet made by some retarded mouse 5000 miles away — who is busy trying to trick other cats…

    I think people will be forced to shop at the globalized wal-marts of the world, but in terms of buying shares and trusting the capitalistic framework of share ownership, IMHO, that will change and people will invest local and tell wall street to piss off! If wall street wants to survive they better stay under the radar and stay very clean for the next decade!

    Also See: George bailey, in It’s A Wonderful Life as an example of acting local and thinking about global vacations.

  7. Matt Dubuque

    Matt Dubuque

    We still have a very big problem on our hands for TWO reasons.

    1. The interbank market is in a VERY deep chill, bordering on a coma.

    2. Even ASSUMING that is ameliorated (perhaps through an Operation Twist of some sort) banks are likely to STILL be exceptionally reluctant to lend to businesses and consumers.

    We have TWO very big steps to go.

    First banks have to lend to each other.

    THEN they need to lend to the rest of us.

    Matt Dubuque

  8. eh

    I bet less than half the population can name their representative. They probably give a high rating just to avoid the embarrassment of admitting that.

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