© Reuters. FILE PHOTO: The exterior of the U.S. Capitol is seen at sunset in Washington, U.S., December 13, 2022. REUTERS/Sarah Silbiger/File Photo
by Jason Lange
WASHINGTON (Reuters) – A bipartisan majority of Americans oppose American taxpayers footing the bill when mismanagement causes a bank to fail, though Republican opposition to bank bailouts has softened in the past decade, a poll shows from Reuters/Ipsos completed on Wednesday.
The poll results point to a potential political problem for the administration of Democratic President Joe Biden if signs of instability in the US banking sector worsen and prompt more aggressive government action.
The two-day Reuters/Ipsos poll found that 84% of respondents – including a strong majority of Republicans and Democrats – think taxpayers should not have to pay to fix problems caused by irresponsible bank management.
Stock markets have swooned around the world since Silicon Valley Bank collapsed on Friday as worried customers withdrew their deposits. Two days later, New York signature bank (NASDAQ:) closed. US stocks fell sharply on Wednesday as turbulence at Swiss banking giant Credit Suisse reignited fears of a new banking crisis.
Banks have come under pressure in recent months from rising interest rates, which reduce demand for borrowed money. In a series of moves telegraphed to investors in advance, the US Federal Reserve, the central bank of the United States, has raised interest rates over the past year in an attempt to control inflation.
Only 49% of Americans (40% Republicans and 55% Democrats) said they favor government bailouts of financial institutions.
Still, support for the bailouts was even more tepid a decade earlier, as the United States emerged from a financial crisis that the government fought off by spending hundreds of billions of dollars on bank bailouts. In a 2012 Reuters/Ipsos poll, just 20% of Republicans and 53% of Democrats said they supported the bailouts.
About half of those who responded to the Reuters/Ipsos poll said they had heard at least enough about the Silicon Valley Bank implosion.
Sixty-eight percent said they were at least fairly confident in the stability of their own bank, and the same percentage had at least that level of confidence in banks in general.
Some 77% of those surveyed said shareholders and executives who profited from a bank in the days before it failed should return those funds to depositors.
US regulators have promised to compensate all depositors at Silicon Valley Bank and Signature Bank, even those with accounts above Federal Deposit Insurance Corp’s standard $250,000 limit, without taxpayers having to cover any costs. Businesses make up many of the bank customers whose money had not previously been guaranteed by the government.
The Reuters/Ipsos poll showed broad bipartisan support for Washington to back bank deposits. Seventy-eight percent of those polled said the government should guarantee people’s deposits and 70% said Washington should support business deposits.
But a strong bipartisan majority also said bank depositors should understand the risk of using a bank to make deposits outside the FDIC limits.
Some experts say the more expansionary deposit guarantees regulators are applying to troubled banks already amount to a bailout because they remove the incentive for individuals to hedge against financial risk.
The Reuters/Ipsos poll, conducted online, polled 1,004 people across the country and had a credibility interval of about 4 percentage points in either direction.
