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Survey: 54% of Americans Dissatisfied With Dodd-Frank Reforms
Posted By Carrie Bay On November 5, 2010 @ 5:51 pm In Government,Market Studies | No Comments
The turbulent financial crisis sparked overwhelming support by Americans for Congress to enact financial legislation to prevent future bailouts. However, according to the latest findings from the ""Chicago Booth/Kellogg School Financial Trust Index"":http://www.financialtrustindex.org, the landmark Dodd-Frank Reform Act, which was designed to overhaul the nation's financial system, failed to meet consumer expectations.
[IMAGE] Among the report's key findings, trust in the financial system dropped to 25 percent in September, down from 26 percent in July, which was the index's all-time high. The Financial Trust Index is a quarterly look at Americans' trust in the nation's financial system and in the private institutions in which they can invest their money.
""A primary consequence of the 2008 financial crisis was a large drop in trust Americans had in financial institutions, and we're seeing a continued decline despite reform enacted to combat this sentiment,"" said Paola Sapienza, a professor of finance at the Kellogg School of Management at Northwestern University and co-author of the study.
In what is widely considered one of the most sweeping pieces of legislation enacted since the Great Depression, only 12 percent of respondents declared they were satisfied with the Dodd-Frank Act, while 54 percent of Americans were dissatisfied.
The majority of Republicans (80 percent) are dissatisfied with the bill, as are Independents (54 percent). The level of[COLUMN_BREAK]
those ""satisfied"" and ""very satisfied"" is low even among Democrats (35 percent).
With this week's elections, Republicans have secured a majority in the House and increased their presence in the Senate, and a number of them have said they plan on fighting to scale back some of the new regulations in the financial reform bill.
Sapienza says the public's overwhelming dissatisfaction with the reform legislation stems from two key provisions: the creation of the Consumer Financial Protection Bureau (CFPB) and the new regulation of banks enacted to prevent future bailouts.
The responses suggest that the Dodd-Frank Act failed to convince American voters of its utility on both aspects.
Only 34 percent of respondents think that the CFPB is a ""useful agency to protect consumers."" Twenty-seven percent feel it's ""useless bureaucracy,"" and 25 percent say it represents ""overreaching of government power.""
Two-thirds of respondents believe the legislation doesn't do enough to protect taxpayers against future bailouts.
Sentiment about real estate pricing and strategic defaults were also examined in the quarterly study, which found that positive housing trends dating from December 2008 have come to a screeching halt.
The public's expectations for housing prices in the next 12 months worsened, and according to the research, the proportion of respondents who foresee a decline in housing prices has risen from 20 to 30 percent.
Although 79 percent of respondents think it is morally wrong to walk away from their mortgages when they can afford to pay them, 44 percent feel less morally obligated to honor them if the mortgage is held by a bank accused of predatory lending.
The authors of the study say resolving the acute feelings of resentment homeowners have against banks is crucial, considering moral attitudes about strategic defaults are directly affected by where the money is owed.
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