Dodd-Frank At Five: Public Opinion On Wall Street, Banks, And Financial Regulation by American Enterprise Institute
Karlyn Bowman, Eleanor O’Neil, and Heather Sims
July 2015
Dodd-Frank At Five: Public Opinion On Wall Street, Banks, And Financial Regulation – Introduction
The fifth anniversary of Dodd-Frank is July 21. While the law is a familiar topic of discussion in Washington, polls show that most Americans do not know much, if anything, about it. We begin this report with a look at people’s awareness and knowledge of the law. In a YouGov online survey from earlier this year, 39 percent said they had never heard of “the Dodd-Frank law which regulates financial markets.” Three polls asked in 2010 while Congress was debating the legislation show that Americans were not familiar with it then either. Most Americans do not follow complex legislative debates closely. They focus their attention instead on broad areas, such as Wall Street, banks, and financial regulation.
This may be why almost no pollsters in the public domain ask about the bill by name. They have asked instead mostly about activities and behavior of banks and financial institutions and general views of financial regulation and its effects. Polls show the public generally split on the impact of financial regulation. Pew has asked four similarly worded questions on this subject since May 2010. Their most recent question, asked in January 2015, is worded “Thinking about financial regulation, which comes closer to your view?” Forty-five percent chose the response, “The government has gone too far regulating financial institutions and markets, making it harder for the economy to grow,” while 47 percent chose “The government has not gone far enough in regulating financial institutions and markets, leaving the country at the risk of another financial crisis.” Their three previous questions also showed a fairly even split. A December New York Times question with three response categories found that 28 percent believed “government regulation of financial institutions and markets put in place after the 2008 financial crisis” had gone too far, 37 percent not far enough, and 27 percent said it had been about right.
Despite the federal government’s efforts to regulate the financial industry, Americans do not believe our economic system is more secure than it was before the financial crisis. In a Pew question from February 2015, 63 percent said the US economic system is no more secure today than it was before the 2008 economic crisis. Thirty-four percent said it was more secure. People may think this in part because they aren’t confident in Washington’s ability to regulate financial institutions. In a 2014 New York Times question, 9 percent had a lot of confidence in the government’s ability to regulate financial institutions, 31 percent had some confidence, 34 percent not much, and 24 percent none at all. This skepticism of government’s effectiveness is also evident in other areas of public opinion. While Americans would like to see something done about a problem, their lack of trust and confidence in the federal government makes them doubt what government can do to solve the problem effectively.
To put the questions about financial regulation in context, we include in the second section of the report a long trend by Gallup and other organizations on regulation in general. The data we have suggests that opinion tipped to the side of “too little” government regulation of business and industry in October 2008, but has since tipped back to the side of “too much” regulation. When Gallup last asked this question in September 2014, about half (49 percent) of Americans said there is too much government regulation of business and industry, while an additional 27 percent said the current amount of regulation is about right. Twenty-two percent said there is too little.
These results should be assessed in light of general impressions of Wall Street, which we examine in the third section of this report. Harris Interactive has one of the most comprehensive batteries of questions in this regard, but has not updated the questions since 2012. Nevertheless, the battery shows people’s deeply ambivalent views about Wall Street. On the one hand, around six-in-ten believe Wall Street is absolutely essential because it provides the money businesses must have for investment. On the other hand, around seven-in-ten think people on Wall Street are not as honest and moral as other people and, separately, that most people there would be willing to break the law if they felt they could make a lot of money and get away with it.
The fourth section of this report looks at confidence in Wall Street, banks, and financial institutions. In June, Gallup updated its yearly series of questions about 15 major institutions and reported that those expressing a “great deal” or “quite a lot” of confidence in banks remained low (28 percent). This response was up slightly from the 22 percent expressing that level of confidence in 2009. Other organizations such as the National Opinion Research Center (NORC) also see a slight uptick in positive views since the financial crash. As the fifth section shows, people have much more confidence in local banks, particularly the financial institution where they do most of their banking.
In the sixth section, we look at confidence in banks and Wall Street compared to other institutions. A 2014 CBS News survey found that banks rank near the bottom in terms of confidence, ahead of only the presidency and Congress.
This report’s final two sections assess public opinion on the economic recovery and on the Federal Reserve and its Chair, Janet Yellen. Most Americans think the federal government’s economic policies following the 2008 crash helped large banks and financial institutions more than any other group. At the beginning of this year, however, in an online survey, only 9 percent told AP-GfK pollsters that they had completely recovered from the Great Recession. As for the Federal Reserve and Janet Yellen, Americans give them tepid marks, though most people are not very familiar with either the institution or its Chair.
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