On Thursday night the Senate passed a massive rewrite of financial industry regulation. House Financial Services Chairman Barney Frank is optimistic that the House and Senate can reconcile their differences and get a bill to the president's desk by early July. News accounts Friday morning suggest that Obama will use passage of the bill to boost his party's fortunes in November. But is this victory likely to produce greater Democratic support on Main Street? I doubt it.
There's no question that Americans think greater oversight of Wall Street is necessary. My colleague Andrew Rugg and I have been reviewing public opinion on Wall Street since the questions were first asked in the 1930s, and we have just released a new American Enterprise Institute Public Opinion Study that compiles our findings. Here are some of the results about the financial crisis.
In Harris's 20-year trend, public confidence in Wall Street has never been particularly high, but it dropped to a low in 2009. Views have improved a little since then, but just 8% in Harris's February 2010 survey had a great deal of confidence in the people in charge of running Wall Street, 43% had some confidence, and 45% hardly any. By contrast, 15% had a great deal of confidence in major companies, 56% only some and 27% hardly any.
Wall Street is rich and powerful and far removed from most people's lives. In another Harris question from February, two-thirds agreed that most people on Wall Street would be willing to break the law if they believed they could make a lot of money and get away with it. In another question in the poll, just three in 10 thought people on Wall Street were as honest and moral as other people. Americans initially favored TARP, but sentiment turned against providing more money for financial institutions quickly, and in the polls in December 2008 and January 2009, majorities didn't want the second half of the TARP funds released.
Americans have little confidence in Wall Street to solve the problems that caused the crisis. The problem for members of Congress and the administration is that Americans don't have confidence in Washington to fix them, either.
In addition, Americans have other priorities. Financial reform has receded in public interest as stories such as the oil spill in the Gulf and Arizona's new immigration law have captured public attention. In a new Pew Research Center poll released Wednesday, 81% said it was very important for Congress to address the jobs situation, 67% the country's energy needs, 59% immigration reform, and 54% financial reform.
In addition, many Americans are worried that greater regulation will be a drag on the economy. Forty-six percent in a Pew Research Center poll released on Wednesday said they were concerned that the government would go too far in regulating financial institutions and markets "making it harder for the economy to grow"; 44% were worried the government wouldn't go far enough. This has been an undercurrent in other polls all spring. A plurality, 42%, in a March Selzer & Company/Bloomberg poll said government had gone too far in terms of fixing what was wrong with the financial industry and another 18% said it had taken enough action. Thirty-seven percent said government had taken too little action. Again, reflecting concerns about federal overreach, 69% in the poll said it would be better to enhance the existing system to make sure bank regulators do more to protect consumers; only 24% wanted to create a new separate agency. An April Fox News/Opinion Dynamics poll found that 57% believed big government was the greater potential threat to the country's future; 26% said big business was.
Americans are generally skeptical of big powerful entities like government, labor, big business and the media. Depending on conditions and events, their level of concern about each of these entities goes up or down. Right now, skepticism of Wall Street is great, but so too is skepticism about Washington.
Earlier this month Fox News/Opinion Dynamics pollsters asked people who they would trust to manage their families' finances. The result speaks volumes. Slightly more than a third, 35%, said members of the Senate who questioned the Goldman Sachs ( GS - news - people ) executives in recent hearings, 19% said the Goldman Sachs executives themselves, but a substantial 34% spontaneously volunteered that they would trust neither.
Karylyn Bowman is a senior fellow at AEI.