Over three-fourths of Americans distrust economic system

Submitted by amrevieL on Wed, 11/23/2011 - 04:02.
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A new survey displays the negativity Americans feel toward the United States financial system proceeds to grow. Faith in the American economic system is indicated by only 23 percent of those surveyed. But it isn't hopeless, professionals say. Regulators, with work, can repair that trust. But the public must also be educated enough to know when the program is failing them. Source for this article: Over three-fourths of Americans distrust financial system
 

Trust index dropping

 

In June, the Chicago Booth/Kellogg School

Financial Trust Index

showed that there is a 25 percent trust rate. That rate decreased to 23 percent now. Public trust in banks, mutual funds, businesses and the stock market are measured in the survey.

 

As reported by author Luigi Zingales:

 

"The findings in this issue reflect what's been reported in the news and demonstrate the fragility of trust many Americans still have in the institutions where they invest their money."

 

Problem with banks

 

In June, bank trust was at 39 percent while it is now at 33 percent. Over half of those questioned trusted credit unions more than major lenders.

 

The Obama Impact

 

Co-author of the index, Paola Sapienza, pointed out an interesting wrinkle that illustrates what a large part politics plays in the public's perception of the economic system.

 

The survey asked half of the people if they wanted job creation. This had to be over deficit reduction. Of those that answered, two-thirds believed it should. The same question was asked to the other half. It was phrased differently though. They were asked, “Do you agree with Obama that a government effort to create new jobs should take priority over a deficit reduction?” Job creation support dropped a lot when the President’s name was mentioned in the query. Republicans showed a large dip. It went down 10 percent. Among Democrats, it went down 5 percent.

 

Getting back confidence

 

As reported by UPI, Dennis Lockhart, president of the Federal Reserve Financial institution in Atlanta, said regulators can work at rebuilding lost trust

 

"Collectively, the community of regulators must judiciously supervise individual institutions and vigilantly monitor the health of the overall system, to guard the public trust and, above all, avoid a systemic crisis."

 

People have to buy

 

According to Lockhart, the community is accountable also. It has to know enough about finances to know if services are good or not. Lockhart said:

 

"We learned over the last decade that the lack of financial literacy in our citizenry imperils the system, and failings of high-level supervisors and managers can result in considerable harm to the economy and the general public."

 

Information from

Daily Finance

UPI

Chicago Booth/Kellogg School

Chicago Booth/Kellogg School

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