Consumers Aren't Convinced That Banks Need More Powers
LaGesse, David, American Banker
Commercial bankers failed to make progress during the past year in convincing consumsers of the need to expand the banking industry's powers, according to a study commissioned by the American Banker.
Yet bankers may have a touch time protecting their turf, as consumers show less resistance to other industries invading the banking business than they do to allowing new powers for banks, according to results from this year's survey on consumer attitudes toward financial services.
About a third of the survey respondents support additional powers for banks, such half continue to oppose those changes. A few more support the general concept of additional powers when real estate and insurance are not mentioned.
But the results in both cases show virtually no change from the responses to the same question in 1984.
"I'm not surprised that banks have gained no ground -- actually I'm surprised their support for new powers hasn't slipped some in the past year," says C.T. Conover, who was a strong advocate of banking deregulation as comptroller of the currency. Mr. Conover, who now works in the private sector in California, says the feeling remains among the public that only banks would benefit from deregulation, not consumers.
"That's why we haven't seen any legislation come out of Congress, despite the continuing discussions and lobbying by bankers," he says.
The most frequent argument against the new powers centers on consumer fear of diversification by their banks, according to responses to an open-ended question. Nearly half of those opposed to expanded bank powers said something about banks not having the expertise for new fields and that they should stick to their specialty of collecting deposits and making loans.
"I think that if the banks branch out into the insurance and real estate businesses that it would be a very risk venture," says a young man from an upper-middle income household in the Northeast. "It would put a definite strain on the establishments they have now -- it would jeopardize the stability of the bank itself."
Or as put by an elderly woman from a low-income household in the Northeast, "Times change, but I don't think banks need to change."
That theme carries through to the mixed opinion of consumers on whether additional powers might improve the health of the banking industry. Those polled split almost evenly when asked if new powers might lead to better health for the industry, a new question asked in this year's survey.
The survey is the second commissioned by the American Banker to measure public attitudes toward banking and financial services. Conducted by Reichman Research Inc., a New York-based opinion research firm, the survey included some 1,000 telephone interviews with adults nationwide.
New Support from the Affluent
Most promising for bank lobbyists is growing support among affluent customers -- those with annual incomes of at least $50,000 -- for new bank powers. That group increased its support slightly in the question that asked about allowing banks into real estate and insurance.
Upper-income respondents showed an even more dramatic increase in support for new powers when real estate and insurance were not mentioned specifically. More than half of those making $50,000 or more supported new bank powers in general in 1985, compared with a third of that group in 1984. …