Americans Have More Faith in Banks Than Congress
Justin Wolfers of Gallup recently took a look at the trend of data relating to confidence in Congress, and the comparison that apparently sprung to mind was that of an abusive relationship. While perhaps lacking something in sensitivity and political correctness, he did have some good points.
He mentioned Fenno’s Paradox — the idea that we may be dissatisfied with Congress when taken as an entity, but when looking at each individual member, we see them more positively — and waxed satirical in his New York Times op-ed about how the fault is all his own for the shortcomings of Congress. When you take a look at the data he’s referencing, you do indeed see the rising and falling of confidence linked with the economy, and you also see a particularly steep dip since 2004 onward, which continues down with a few small jumps, leaving sentiment far below even the lowest percentages seen between 1991 and 1994.
In the same Gallup report, we see that congressional confidence falls at the bottom of a list of 17 items polled on in 2014, below everything from the presidency to big business to news on the Internet — though that’s only just above Congress, winning over televised news. What is of particular interest though, is how Congress falls below banking confidence. With the economic downfalls really hitting in 2008 and 2009, the droop in congressional confidence is expected.
However, you’d expect that banks would be more of a target for public disdain, and while they did hit a record low in June 2012, reaching 21 percent — now up to 26 percent in 2014 — that hardly compares with the 13 percent citing a “great deal/quite a lot” of confidence that Congress saw in the same period.
Lindsay Owens wrote a assessment of polling data from the recession period and bank bailouts in The Annals of the American Academy of Political and Social Science. In it, she suggest that based on “trends in confidence in commercial banks, local banks, savings and loan associations, Wall Street, and Wall Street executives over the past 40 years” from 1971 to 2011, she found that “while changes in the business cycle have an effect on public opinion in this domain, it is the economic contractions that correspond to major scandals in the financial sector that motivate the largest shifts in confidence and provoke the most public outrage.”
This certainly makes sense, given the increase seen in bank confidence since 2012, rising from 21 percent to 26 percent in the last few years despite ongoing struggles Americans are dealing with in the financial industry. It also makes sense that Congress would see a greater dip in confidence than the banking industry, despite the economy being such a major focus and the banking bailout being such a major hit on banks’ reputations.
When you look at the historical polling trends Gallup has on record, a number of interests have seen decreasing confidence, from public schools to banking, and even items not listed by Gallup, such as immigration and Social Security. Congress tends to be the umbrella target, catching flack for issues across the board.
However, banking and Congress have some parallels, as Stefan Ingves, chairman to the Basel Committee on Banking Supervision, pointed out in a keynote address in New York this year. “Banking is a business built on confidence … modern banks are highly leveraged institutions, and fractional reserve banking can only be successful when lenders to a bank have full confidence that it has the financial strength to meet its obligations as and when they fall due,” said Ingves. It’s a comparison that’s particularly salient as we consider upcoming elections.
While Gallup’s Wolfers may have little confidence that Americans can overcome Fenno’s Paradox and lose enough confidence to result in a shakeup of the Congressional “industry,” as we could call it in this comparison, recent loss of Republican House leader Eric Cantor may suggest otherwise. Some argue that his reelection defeat was a result of immigration policy stances, while others — himself included — point to a party split fueled by Tea Party demands.
But some say Cantor lost due to a perceived loss of connection with his constituents. “It sends a pretty strong signal that while money matters, voters may matter more, and people have to have a little respect for the right of the voter to have attention paid to them, and the right of the voter to throw people out if they’re not happy with them,” said former House of Representatives Speaker Newt Gingrich to CNN.
In other words, Congress may be seeing less confidence than banks, but banks are a little harder to vote out of office, even with incumbents seeing such strong advantages historically — and lawmakers may prove more susceptible to shocks like Cantor’s as congressional perception reaches new lows.
More From Wall St. Cheat Sheet:
- Cantor Loses House Leadership: Is Immigration or Party Split to Blame?
- Goodbye Cantor, Hello McCarthy: What’s Next for a Split GOP?
- Here’s Why Eric Cantor Lost (Hint: It Wasn’t for Lack of Funds)
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