Consumer Confidence in Banking System Hits New Low

Fewer than 20% of Americans have “a great deal” or “quite a lot” of confidence in the banking system, according to a poll released last week by Gallup.

The poll was conducted in advance of the release of the stress test results conducted on financial institutions nationwide. The 18% who had “a great deal” or “quite a lot” of confidence is down from 32% last June and 41% in June 2007. Of the 18%, 5% had “a great deal” of confidence and 13% had “quite a lot” of it. Confidence levels were not even this low during the 1990 recession following the S&L crisis.

What is interesting though, is that the public seems to be exhibiting NIMBY — not in my backyard. While their overall confidence in the banking system is low, 58% said they had “a great deal” or “quite a lot” of confidence in their primary institution and 72% said they were not planning on switching their primary bank.

It’s odd that there exists such a disconnect among consumers — a massive distrust of the banking system, but explicit confidence in their own bank.