The banking turmoil following the collapse of Silicon Valley Bank (SVB) has significantly affected the American public’s confidence in banks and other financial institutions, according to a new poll.
The poll from the Associated Press-NORC Center for Public Affairs Research found that just 10 percent of U.S. adults say they have high confidence in the nation’s banks and financial institutions, down from 22 percent in 2020.
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A total of 57 percent said they have “only some” confidence in banks, while 30 percent have “hardly any.”
The nationwide poll of 1,081 adults was conducted from March 16–20, using a sample drawn from NORC’s probability-based AmeriSpeak Panel, which is designed to be representative of the U.S. population. It has a margin of error of plus or minus 4 percentage points.
Along with declining confidence in banks, the poll found that fewer Americans have high confidence in any branch of the U.S. government.
In addition, roughly half of the public anticipates the national economy and the state of the country will decline over the next year, with Republicans more than twice as likely as Democrats to expect the situation to worsen.
The poll also found that a majority of Americans believe the government is not doing enough to regulate banks and other financial institutions: 56 percent said the government isn’t doing enough to regulate the industry, while 27 percent said it’s doing “about the right amount,” and 15 percent said it’s regulating “too much.”
Biden, Fed Say Banking System Stable
The latest findings come as both the Biden administration and the Federal Reserve have sought to quell fears over possible wide-reaching bank instability.
“Americans can have confidence that the banking system is safe. Your deposits will be there when you need them,” Biden said at a White House press conference on March 13.
His comments were reiterated by Federal Reserve Chairman Jerome Powell on Wednesday after the policy-making Federal Open Market Committee (FOMC) voted unanimously to raise interest rates by 25 points.
While speaking after the FOMC meeting, Powell told reporters that the U.S. banking system remains “sound and resilient” with “strong capital and liquidity.”
“We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound,” Powell told reporters. “We are committed to learning the lessons from this episode, and to work to prevent episodes from events like this from happening again.”
However, fears are still rife of possible contagion following the collapse of SVB, the nation’s sixteenth-biggest bank, on March 10. The bank’s failure was prompted by a combination of rising interest rates, a dry-up in venture capital, and that a high percentage of customer deposits were invested in Treasury bonds, which are highly sensitive to interest rates.
‘Banking Crisis of the Rich’
Two days later, regulators closed New York-based Signature Bank, which had recently made headlines over its alleged involvement in the now-bankrupt crypto firm FTX.
Flagstar Bank, a subsidiary of New York Community Bancorp, will buy a significant portion of the failed bank’s deposits under a $2.7 billion deal with U.S. regulators announced on March 19.
Shortly after, Swiss banking giant Credit Suisse—which is among 30 financial institutions known as globally systemically important banks— was acquired by rival UBS in a $3.23 billion deal meant to stave off a collapse and broader market chaos.
However, some industry experts have framed the current turmoil as a “banking crisis of the rich” as opposed to the general population.
Speaking at a Bloomberg conference in London on Wednesday, Davide Serra, founder and CEO of global asset manager Algebris, said, “In this banking crisis, in a way, I would characterize it as a banking crisis of the rich. If you think about it SVB was the bank of all the tech guys, startups, and venture capitalists, the average deposit was more than $10 million—that’s not a little bank.”
Serra also noted that First Republic was the bank of “hedge fund managers and private equity guys,” while Credit Suisse was the bank of the “global rich.”
“This time assets are fine, it’s a liability problem, and it’s in banks that are not normal banks … so in a way, it’s institution run, very concentrated clientele, albeit billionaires, and they all panicked” and moved their deposits out of the banks, he said. “But that’s not what’s going to happen to the rest of the banking system.”
Article cross-posted from our premium news partners at The Epoch Times.