THE TIMES POLL : Faith in Banks Drops but Most Like Their Own

Confidence in the nation’s banks and thrifts has eroded considerably since the mid-1980s, even though an overwhelming number of Americans have faith in their own banks and believe that their money is safe, a survey by The Times Poll shows.

The results also suggest that while most express limited confidence in the soundness of banks and savings and loans in general, few have yet to be personally hurt by the banking crisis.

Times Poll Director John Brennan said the views expressed in the poll can be likened to those the public holds about institutions such as Congress: greater satisfaction with their individual representatives than with the overall body.

“Far more people have faith in their own bank than in the industry as a whole. That helps contribute to the stability of the system,” Brennan said.

Banking experts say such confidence in individual institutions in part reflects the effectiveness of the government’s generous deposit insurance program--along with past actions that have protected uninsured depositors at large banks--in shielding consumers from the financial problems banks and thrifts suffer. In addition, despite the well-publicized problems at several large banks, many of the nation’s regional and small banks remain healthy.

The Times Poll surveyed 1,761 adult Americans nationwide by telephone April 6 through April 9. The margin of sampling error on the nationwide survey is plus or minus 3 points. The error margin for subgroups may be higher.

The results suggest public confidence in banks is mostly lukewarm. Just 36% of those surveyed in the Times Poll expressed either a lot of confidence--or a great deal of confidence--in the nation’s commercial banks.

Although unchanged from a similar Gallup survey last year, the figure is down from the roughly half who expressed a high level of confidence in banks in Gallup surveys from 1981 through 1988. In 1979, the Gallup survey showed six people in 10 expressing high levels of confidence in banks.

Still, only 14% of those surveyed said they have very little faith in the nation’s commercial banks. The largest percentage in the Times survey--47%--said they have “some” confidence.

And despite problems of individual financial institutions, two-thirds of Americans say the nation’s system of business and industry is reasonably sound.

More people expressed a great deal or a lot of confidence in the country’s commercial banks than they did in such institutions as big business (27%), Congress (24%), the stock market (19%) and savings and loans (16%). The military (91%) and credit unions (49%) finished higher. Forty-one percent expressed a lot of confidence in the U.S. Treasury and 32% expressed strong faith in insurance companies.

Savings and loans, whose problems have commanded news space for some three years, fared the worst by far among institutions mentioned in the poll. The survey found 51% of those responding to the survey with very little confidence in the nation’s thrifts. Just 16% expressed a great deal or a lot of confidence in S&Ls;, with 31% expressing some confidence. A 1985 Gallup Poll showed 36% expressing a lot of confidence.

More than one-third (37%) said their confidence in the nation’s banking system is weakening, with only 8% saying it is growing stronger. But more than half said their level of confidence is not changing.

People continue to maintain a broader amount of faith in their own bank and in the safety of their own savings and investments. Nearly three-quarters of those surveyed said they have either a great deal or a lot of confidence in their bank, with 22% expressing some confidence. Just 5% expressed little confidence.

The poll showed 87% of those surveyed believe their savings and investments are very secure or fairly secure, with 9% saying they feel their money is fairly or very insecure.

Despite increased depositor anxiety in recent years caused by the rising financial problems of the nation’s thrifts and banks, the poll found few people who have actually been hurt financially by a bank or savings and loan collapse.

Some 94% of the people said they and their immediate families have not been hurt by bank or thrift failures. The remaining 6% report they believe they have suffered some damage stemming from a collapse.

The results are in line with a point regulators often make--that despite the growing problems with the nation’s banks and savings and loans, the number of depositors who actually lose money as a result of a bank or thrift collapse is tiny, less than 1%.

The government backs deposits up to $100,000. In addition, customers at failed institutions who do have money on deposit in excess of $100,000 often are aware of problems months, or even years, before an institution is sold or closed. And when a large institution fails, the government to maintain public confidence often steps in to protect all depositors as it did in January to protect customers at Bank of New England.

“People express confidence in the safety net, not in the system,” said Lowell L. Bryan, who heads the financial institutions practice for the consulting firm McKinsey & Co.

Yet banking experts said the results show how delicate a task Congress and the Bush Administration face in reforming the deposit insurance system because it is a linchpin in keeping public confidence solid.

“What people want to hear is that their insured deposits are fully protected. Now is not the time to tell people we want you to decide if your bank is safe or not,” said Auburn University Professor James Barth, a banking expert and former government savings and loan economist.

The survey showed 54% favor limiting to $100,000 the total amount of federal deposit insurance available to individuals for accounts at any one bank, with 35% opposed.

More people gave the Administration low marks than high marks for its handling of the nation’s banking problems. On that question, 45% expressed either some or strong disapproval while 36% expressed either some or strong approval.

Still, there is little evidence that it is seriously affecting President Bush’s overall rating--72% of those who disapproved of Bush’s handling of the nation’s bank problems gave him high marks overall. And 70% of those with very little confidence in the nation’s banks approved of the job Bush is doing. Bush’s overall job-approval rating in the survey was 82%.

The Times Poll also found that the anti-regulation mood of the early 1980s has abated. Only 27% of the respondents said that there is too much regulation of business, compared to 54% in a similar 1981 Times survey. In addition, just 11% believe there is too much regulation of banking, while 54% said banks are subjected to too little regulation.

Yet nearly half (48%) said they would favor loosening banking laws to allow banks to sell financial services such as stocks and bonds, while nearly six in 10 would allow banks to freely open offices in other states. Some 37% opposed allowing banks to expand into other financial services, while 30% were opposed to banks expanding freely into other states.

HOW THE POLL WAS CONDUCTED

The Times Poll interviewed 1,761 adult Americans nationwide by telephone April 6 through April 9, 1991. The margin of sampling error for percentages based on the sample is plus or minus 3 points. For percentages based on certain subgroups, the error margin is somewhat higher. The survey is conducted using random digit dialing techniques that ensure that each region is properly represented and that both listed and unlisted residences have an opportunity to be contacted. Results are adjusted to conform with national census figures for characteristics such as sex, race, age, education and household size. An over-sampling technique is employed to secure an adequate subsample of Latinos for analysis.

ERODING CONFIDENCE

Results are based on a nationwide Times Poll of 1,761 adults conducted between April 6 and April 9. Comparisons are to past Times Polls.

CONFIDENCE IN INSTITUTIONS

How much confidence do you have in the following institutions:

GREAT DON’T INSTITUTION DEAL A LOT SOME LITTLE KNOW The military 69% 22 7 2 - Banks you deal with 37% 34 22 5 2 Credit unions 19% 30 29 11 11 U.S. Treasury 16% 25 43 12 4 Nation’s commercial banks 10% 26 47 14 3 Insurance companies 11% 21 40 26 2 Big business 7% 20 49 21 3 Congress 7% 17 46 29 1 Nation’s financial institutions 6% 15 48 26 5 The stock market 5% 14 46 24 11 Firms that sell stocks/bonds 4% 13 45 25 13 Savings and loans 5% 11 31 51 2

EFFECT OF BANKING SYSTEM PROBLEMS

* Have self or immediate family member been hurt by bank or savings and loan failure in past few years?

Yes, with major financial damage: 3%

Yes, with minor financial damage: 3%

No, have not been hurt: 94%

DEREGULATION FERVOR SUBSIDES

* Opinion of government regulation of business and industry:

NOW MARCH, ’81 There’s too much 27% 54% There’s too little 29 18 Right amount 36 14 Don’t know 8 14

Source: Times Poll