In this morning's New York Times, Adam Nagourney writes about concerns within the Obama administration that the latest news about bonuses paid to AIG executives could spark "a populist backlash against banks and Wall Street" that might "end up being directed at Congress and the White House and could complicate President Obama's agenda." How real is that threat since, for the moment at least, the Obama administration appears powerless to stop it?**
Since the Washington Post broke just this story yesterday, we do not have specific soundings yet from pollsters. However, we do know quite a bit about the existing attitudes that will shape those reactions, particularly two themes:
- First, large majorities of Americans were already skeptical about the role of banks and large financial institutions in this crisis and opposed to their receiving more financial assistance.
- Second, that distrust fuels widespread support for stricter federal regulation of banks and large financial institutions (with a caveat about "nationalization").
Those two sets of attitudes create both risk and opportunity for the Obama administration. Let's consider each in more detail.
First, distrust of banks, financial institutions and "Wall Street" has never been higher. When the Harris Poll (telephone) updated its annual confidence ratings for sixteen American institutions last month, "Wall Street" ranked dead last. Only 4% now say they have "a great deal of confidence" in Wall Street, 33% have "only some" confidence and 57% have "hardly any confidence at all." The same survey also finds what Harris describes as the "worst results ever" for Wall Street on questions tracked since the mid 1990s. For example, 71% now agree 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," up eight points since last year (from 63%; 27% now disagree).
Similarly, when the NBC/Wall Street Journal poll asked Americans to rate their confidence in 21 different institutions in January, "Wall Street" and "the financial industry" ranked last with majorities (59% and 60% respectively) saying they had "very little" confidence or "none at all" (only 13% and 10% respectively expressed a "great deal" or "quite a bit" of confidence).
In the survey released just today by the Pew Research Center, nearly half (48%) of Americans say they are "angry" about the government "bailing out banks and financial institutions that made poor financial decisions" (39% say they are bothered but not angry, only 12% are not bothered). Not surprisingly, this anger translates into considerable skepticism about bailouts of banks and financial institutions:
62% say the federal government has spent too much on "large banks and other financial institutions in danger of failing," 8% say it is spending too little and 21% say the amount is about right (Newsweek [pdf]).
59% oppose "giving aid to U.S. banks and financial companies in danger of failing," while 39% favor it (USA Today/Gallup).
50% disapprove of "the federal government providing money to banks and other financial institutions to try to help fix the country's economic problems," 39% approve (CBS/New York Times [pdf]).
Note that the expression of disapproval is slightly lower on the last question, which justifies assistance as way "to help fix" the economy. Nonetheless, the opposition as measured over the last month is still considerable, even before the latest AIG bonus story. As Nagourney's piece points out, the same CBS/New York Times survey found 83% of Americans agreeing that the government "put a limit on the amount of money that senior executives can earn" at companies "receiving financial assistance from the government."
On the other hand, the visceral anger also translates into support for greater regulation of banks and financial institutions. For example, last month's ABC News/Washington Post survey found three quarters of Americans willing to support "stricter federal regulations on the way banks and other financial institutions conduct their business," and 49% said these regulations should be "much stricter" (22% were opposed).
The caveat is that while Americans voice support for stricter regulation, they blanche at the word "nationalization" depending on the context. Consider the split-form experiment conducted last month by the USAToday/Gallup poll. They split their interviews into two random samples and asked each a slightly different question (emphasis added):
Do you favor or oppose the federal government temporarily taking over major U.S. banks in danger of failing in an attempt to stabilize them?
-- 54% favor, 44% oppose, 3% no opinion
Do you favor or oppose federal government temporarily nationalizing major U.S. banks in danger of failing in an attempt to stabilize
-- 37% favor, 57% oppose, 6% no opinion
So when pollsters label the same underlying idea as "nationalization," it receives percentage 17 points less support than when described as a "take over." The word "nationalization" is obviously loaded with more meaning in this context, but might not be a barrier. Consider what happened when Newsweek asked a similar question and combined the verbiage:
Temporary nationalization is another way for the federal government to deal with large banks in danger of failing. This is where the government takes over a failing bank, cleans its balance sheets, and then quickly sells it off. In general, which do YOU think is the better way to deal with failing banks... (READ)
-- 29% Government financial aid WITHOUT any government control of the bank, OR
-- 56% Nationalization, where the government takes temporary control?
-- 15% Neither/Other/don't know
So if the AIG story devolves somehow into a debate about bank "nationalization" per se, public opinion may move in unexpected directions. The bigger and more overriding point here is that the AIG bonus story, which will inevitably fuel even greater unease associated with bailouts of banks and financial institutions, may make Americans even more eager for new regulation of those same institutions than they might have been before, and that may present Obama and his allies with as much opportunity as potential backlash.
Yes, the anger over AIG creates the potential for a populist backlash, but it also creates the potential for support for greater regulation of banking and financial institutions across the political spectrum that would have been unimaginable a year ago.
**Hat tip to NPR's Liz Halloran, who emailed with this question early this morning. Her story is now posted on NPR.org.
Update: The Washington Post's Jon Cohen notes that anger about bank bailouts as measured by the new Pew Research Center poll extends across the political spectrum but is greatest among "Republicans (55 percent angry), independents and those with family incomes of $75,000 and up (both 53 percent)."
Update 2: A new poll released tonight by CBS News (story, data) reinforces American's skepticism toward bailouts of banks and financial institutions. Opposition to using government money to assist banks "to help fix the country's economic problems" nudged upward since February (from 50% to 53%). A plurality (48%) says it is is "mostly resentful" that Obama's policies "could benefit irresponsible managers and bankers" rather than "mostly relieved that those institutions might start lending to home buyers and businesses again" (40%).