Financial system trust down with Dodd-Frank dissatisfaction
Trust in the financial system and real estate market is gradually depleting, according to the Chicago Booth/Kellogg School Financial Trust Index results. The survey found trust index to be 25% for the third quarter of 2010, a 1% drop from from the all-time high in June. The Financial Trust Index is a quarterly survey conducted by Social Science Research Solutions, a branch of AUS and ICR/International Communications Research. The results come from 1,005 phone interviews nationwide. The authors of the report, both business professors, attribute the lack of trust in the financial industry to the passage of Dodd-Frank, saying that the bill did not meet consumer expectations with regard to reform. The survey found that only 12% of respondents are satisfied with the Dodd-Frank Act while 54% are dissatisfied. “A primary consequence of the 2008 financial crisis was a large drop in trust Americans had in financial institutions, and we’re seeing a continued decline despite reform enacted to combat this sentiment,” said Paola Sapienza, a professor of finance at the Kellogg School of Management at Northwestern University. “Interestingly, Americans who declared themselves satisfied with the Dodd-Frank Bill trust banks 8% more, but unfortunately only a minority is happy with the legislation.” Americans trust every sector of the financial system less than they did last quarter except for banks. The percentage of people that trust banks rose to 43% from 39% last quarter. According to the data, 14% of Americans trust the stock market, down from 18% last quarter; 28% of Americans trust mutual funds, down from 32% in June; and 14% of people trust large corporations, down from 17% last quarter. This is the lowest the index has been for the stock market and mutual fund sector. Only 13% of Americans trusted large corporations in March. For the first time this year, the majority of homeowners expect home prices in their neighborhood to drop over the next 12 months. Approximately 30% expect a decrease, up from 20% in June and 21% in March. Twenty-three percent of homeowners expect an increase in home prices, down from 26% in June and 31% in March. Write to Christine Ricciardi.