Everyone hates Dodd-FrankOctober 21, 2010: 6:35 AM ET
Americans aren't exactly in love with their banks, but they surely prefer them to Congress.
More than half of those surveyed in a new poll say they are dissatisfied with the landmark Dodd-Frank Act. This finding comes from the Chicago Booth/Kellogg School Financial Trust Index, a quarterly record of Americans' views on the markets, the banks, mutual funds and their interaction with the government.
Just 12% of the thousand-odd respondents to the survey describe themselves as satisfied with the legislation, which was signed into law in July in reaction to the meltdown two years ago of the financial system. That compares with 54% who say they are dissatisfied.
Even the banks aren't quite this unpopular, though the survey was conducted before the latest uproar about rampant corner-cutting in the foreclosure process.
The headline financial trust number dropped to 25% in September from 26% in June, which amusingly was the all-time high for the series, going back two years. As it happens, banks have been the strongest performer in the index, scoring approval ratings near 40% -- twice that of the stock markets and generic big companies, both of which have been languishing in the teens.
The trust number ticked down as Americans grew angrier about high unemployment. Anger hit 51% in the latest poll, its highest level since last fall. Meanwhile, respondents continue to have complicated views about mortgage problems. Four in five think it is morally wrong to default on mortgages they can afford, but 44% might walk if the mortgage is held by a bank accused of predatory lending, the survey shows.
Joblessness and housing aren't the only things making survey respondents mad. In a less than surprising development, eight Republicans in 10 say they are dissatisfied with Dodd-Frank. The law, more than a year in the making, has been widely attacked as too long (2,300 pages) and as failing to convincingly address the most egregious problems in a deeply imbalanced U.S. financial sector -- such as too big to fail and the unclear status of the housing GSEs, Fannie Mae (FNMA) and Freddie Mac (FMCC).
But in a less than uplifting sign for the congressional Democrats who pushed the bill through, 54% of independents identify themselves as dissatisfied with the legislation. Even among Democrats, just over a third said they were either satisfied or very satisfied with Dodd-Frank.
"I was shocked by how little satisfaction there was," said Paola Sapienza, a professor of finance at the Kellogg School of Management at Northwestern University and a co-author of the study with Luigi Zingales of the University of Chicago. "Reform is perceived as pretty much of a failure."
She said the findings look bad for the Obama administration but are "more negative for Congress." She said respondents were much more downbeat in their assessment of the law when questions framed it as having been passed by Congress, rather than as having been signed by Obama.
Sapienza said the findings suggest, not for the first time, that the administration has failed to make its case with voters -- thanks in part to Obama's decision to abandon the bully pulpit and allow an unpopular, liberal-minded Congress to take the lead on major legislative efforts such as financial regulation and health care refom. Both measures ended up passing but without leaving any impression that their backers had succeeded in doing anything but making everything more complicated.
"Either there was a problem in communicating the legislation," she said, "or there was a demand for new regulation -- but not this set of regulations."