PRINCETON, NJ -- The percentage of affluent Americans -- those having $100,000 or more in investable assets -- saying they have "a great deal" or "quite a lot" of confidence in U.S. financial institutions or banks fell to 30% in September from 37% in August and 36% in July. At the same time, the percentage saying they have "very little" confidence increased to 26% in September from 19% in July and August.
New Low in Affluent Americans' Confidence in Banks
Given all of the distress in the U.S. financial system this year, it is not surprising that affluent consumers are expressing less confidence in the nation's banks and other financial institutions or that whatever confidence they have has tended to be volatile during recent months. For example, the percentage of affluent consumers saying they have "a great deal" or "quite a lot" of confidence in the nation's banks fell from 38% in late July to 29% a month later, before bouncing up to 40% in the first week of September.
However, since that time, the growing U.S. financial crisis has taken an increasing toll on this group, with the percentage expressing confidence falling to its lowest level of the last three months -- 25% -- last week. Not surprisingly, the financial chaos of the past few days seems to have added to the toll: affluent consumer confidence in banks appears to have declined further to just 21% on Monday.
The unprecedented collapse of numerous major U.S. financial institutions over the past few weeks has shaken affluent consumers' confidence in the banking system. The Treasury legislation negotiated with the congressional leadership and brought before the House Monday afternoon was designed, at least in part, to help reassure Americans that the banking system is safe. However, the effort to achieve passage of this legislation and the aftermath of the failure to do so may be having just the opposite effect.
Confidence in the U.S. banking system and certainty that one's money is safe are essential for all Americans if the economy is going to continue to function efficiently. This is one reason the Federal Deposit Insurance Corp., backed by the full faith and credit of the U.S. government, insures deposits in FDIC-insured banks up to $100,000. The growing recognition of the declining confidence in the safety of the U.S. banking system is the reason an increasing number of observers are calling for an immediate increase in federal deposit insurance coverage to $250,000 or more.
Such an increase in FDIC coverage requires congressional action. Whatever else Congress considers when it resumes work on the bailout on Wednesday night, Gallup's polling of the nation's affluent consumers suggests an increase in FDIC coverage limits deserves immediate consideration.
Gallup is interviewing affluent Americans nightly as part of one of its proprietary banking studies. Results are based on random interviews conducted with affluent national adults, aged 18 and older, having $100,000 or more of investable assets, conducted between July 20 and Sept. 29, 2008.
For results based on the July sample of 307 national adults, one can say with 95% confidence that the maximum margin of sampling error is ±7 percentage points.
For results based on the 2,150 affluent adults interviewed during August and the 2,276 affluent adults interviewed in September, the maximum margins of sampling error are ±2 percentage points.
For results based on the weekly samples ranging from a low of 171 affluent adults to a high of 1,112 affluent adults, the maximum margins of sampling error range from ±8 percentage points to ±3 percentage points.
For results based on the Sept. 29, 2008, sample of 217 affluent adults, the maximum margin of sampling error is ±8 percentage points.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
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