Consumer Confidence in Banks Returning

Despite the financial crisis, banks’ reputations are improving.

After a decline in confidence, affluent Americans are once again more positive about their banks, according to new data from Gallup.

The Gallup data shows that 34% of affluent Americans – those with $100,000 or more of investable assets — were confident in the U.S financial system as of Oct. 19. Through Oct. 12, confidence hovered at around 25%.

“Confidence levels among affluent Americans began to initially waiver with the government takeover of Freddie Mac, Fannie Mae, AIG, and the failure of Lehman Brothers,” says Dennis Jacobes, chief economist for Gallup, in an interview with BankInnovation.net.

“The confidence levels of affluent Americans are the most sensitive to what is happening within the financial sector, because many of them are the ones who have money at risk,” he says. “Many are investors, and are directly impacted by what happens.”

Jacobes says the outcome of the upcoming presidential election will play a large role in further restoring confidence in banks. Recent polls show 80% of Americans have little confidence in Bush’s economic team.

“The new president will have the chance to re-exert economic leadership and confidence,” he says.

So what has spurred the return of consumer confidence in banks?

The first reason is the increase of the Federal Deposit Insurance Corp.’s insurance limit to $250,000 in early October, he says.

“The fact that there haven’t been any recent bank failures also helps,” he adds.