Financial Opinions Nosedive

Courtesy : Karlyn Bowman - Forbes

Last year this time, the markets nosedived after the Lehman bankruptcy on Sept.14, 2008.
One year later, how has public opinion fared? How do Americans feel about the institutions that have dominated the headlines in our cascading financial crisis? Fortunately for students of public opinion, several survey organizations have been asking identical questions about our confidence in the financial world for decades.

Yahoo! Buzz In 1977, Harris asked about people "in charge of running Wall Street," and 19% of those polled expressed a great deal of confidence. Over 30 years later, in Harris' February 2009 survey, only 4% had that same level of confidence, 33% had "only some," and 57% had "hardly any at all." In terms of high confidence, Wall Street ranked lower this year than any of the other 15 institutions Harris examined--even lower than Congress, which was at 9%, an institution whose ratings are usually low.

In Harris' trend, high confidence in Wall Street declined throughout the 1980s, a downward spiral that began before Oliver Stone's film by that name came out in 1987. The low point for the decade, which was 8%, came in 1989. Whether his sequel, Wall Street 2, which will be released in April 2010, will have any effect remains to be seen. In an interview with TheNew York Times last week, Stone and the film's star, Michael Douglas reported being surprised by the number of people who were attracted to the original film's seductive villain, Gordon Gekko.

Confidence in Wall Street picked up in the halcyon economic times of the late 1990s, in 1999 and again in 2000, and during these years 30% said they had a great deal or quite a lot of confidence in Wall Street.

Another question Harris asks about Wall Street gives bulls and bears support. More people (54%) in 2009 still said Wall Street benefits the country than said it harms it (39%). In 1996, however, when Harris first asked that question, 70% were bullish on Wall Street. 54% is the lowest response in the history of the question.

High confidence in those running "major companies" in Harris' data has declined in the past year, but not as sharply as confidence in Wall Street. Eleven percent have high confidence today. In Gallup's question about "big business" this year, 16% had a great deal or quite a lot of confidence, the lowest level since the question was first asked in 1973. And the gap between high confidence in big and small business was the largest ever in the poll (16% to 67%).

Gallup started asking about confidence in banks in 1978, when 55% of those surveyed said they had a great deal or quite a lot of confidence in them. The savings and loan scandal took a toll, and by 1990, just 36% expressed this level of confidence. Banks recovered some in the 1990s, with 43% expressing a great deal or a lot of confidence by the end of the decade. This year, in two questions asked by Gallup, confidence in banks hit new lows. In Gallup's latest question from June, just 22% expressed a great deal of confidence, down from 32% in the 2008 poll.
Restoring trust in the banking system won't be easy, and it may be a bottom-up process. While only 18% had a great deal or quite a lot of confidence in U.S. financial institutions or banks in Gallup's April poll, 58% had high confidence in their main or primary bank. Only 11% had very little confidence in their own bank, but they planned to stick with them. Fewer than 1 in 10 said that they intended to decrease the amount of money that they had with their bank or planned to switch to another bank in the next three months. Whatever the trajectory of opinion in the next few years, we know that it will, like the markets, have its ups and downs.

Karlyn Bowman, a senior fellow who studies public opinion at the American Enterprise Institute, writes a weekly column for Forbes.