A new Gallup poll published Thursday shows that almost half (48%) of American citizens worry about the safety of their bank deposits.
Coming a month after the collapse of tech-startup lender Silicon Valley Bank and Signature Bank, and less than a week after the collapse of First Republic Bank, the survey indicates the crisis in confidence in American lenders may not be over yet.
Among Americans, roughly one-fifth (19%) of the 1013 citizens polled said they were “very worried” about the security of their deposits, with 29% more “moderately” worried about whether their deposits were secure. 30% said they were “not too worried,” while 20% said they were not worried at all.
Analysts noted the results mirrored the results seen in Gallup polling in 2008, immediately after the collapse of Lehman Brothers, an investment bank which was deemed “too big to fail,” which triggered the worst banking crisis seen since the Great Depression.
Republicans showed greater concern about the security of their deposits, as 55% said they were worried, while 51% of independents voiced concern, and only 36% of Democrats voiced worry.
Experts attributed the variability to how individuals felt about the party in control of the Presidency. When the same polling was done in 2008 following the collapse of Lehman Brothers under the Presidency of George W. Bush, 34% of Republicans worried about the security of their deposits, while 55% of Democrats and 44% of Independents worried about their deposits at the time. Taken again, three months later, after Democrat Barack Obama had taken office, the polling had flipped, with Republicans voicing more worry.
50% of Americans making less than $100,000 per year worried about the safety of their deposits, compared with 40% of those making more than $100,000 per year who were worried, as the wealthier exhibited less worry despite the fact that wealthier individuals were more likely to have deposits larger than $250,000, which would not be covered by FDIC insurance. It indicates that a strong distrust of the government’s guarantees was guiding the thinking of respondents.
According to a paper from the Social Science Research Network released recently, almost 200 additional American banks face risks similar to those faced by Silicon Valley Bank and Signature Bank. Lawrence McDonald, a former VP at Lehman Brothers, issued a report estimating 50 banks were poised to collapse, and warned that the government would have to increase deposit guarantees if it wanted to stabilize the sector.
Although President Joe Biden has insisted that there is nothing wrong with the US financial sector he has said his administration will increase FDIC deposit guarantees beyond the $250,000 cap, if it becomes necessary to stabilize the US banking sector.
