The collapse of the key major banking institutions has been remarkably calm. At WaMu, there was never a run, like you’d see in It’s A Wonderful Life, but rather a long, slow loss of deposits, culminating in a civil, dignified funeral at the hands of the FDIC.
This is particularly odd (and comforting) since confidence in retail banks is remarkably low.
AdAge reports: Only 21% of consumers polled are confident in U.S. banks, according to a survey taken in late September by Gallup. That marks an unprecedented drop from 40% in mid-July and is the lowest level of consumer confidence in banks in three decades. The 21% low easily beat the previous trough of 30% in October 1991, which occurred amid a major recession, the savings-and-loan crisis and lingering turmoil from the Gulf War.
We’re tempted to think that Americans, even if they’re worried, just can’t be bothered to go to the bank, withdraw their deposits, go to the local jeweler and buy up gold. It’s like any other money decision, right? Sure, people say all the time “this will be the year that I open up that IRA”, but in the end, they don’t do it, even though it’s very simple. So even though people are worried about the health of banks, we can all appreciate the fact that they won’t get around to doing anything about it.
There’s also a more charitable interpretation revolving around a common bias:
Gallup’s findings show that while fewer than 25% of consumers trust U.S. banks, a much healthier 66% said they had confidence in the local banks where they do business. Both numbers are down from mid-July, but while national bank confidence dropped from 40%, local bank confidence dropped from 80%.
“What people were saying is … ‘I don’t trust those other bums, [but] I believe in the people at my individual institution,'” said Douglas Berlon, Gallup global practice leader for financial services. “
It’s the same way people view Congress. “They’re all bums! Throw ’em all out and start over! Oh, but my Rep., he’s a nice guy, I met him at a parade once and he kissed my baby’s forehead, so keep him.”