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Gallup poll reveals declining public trust in US banks and concerns over the safety of deposits
The findings of the recent Gallup poll suggest that the public's faith in banks is waning. Nearly half of the respondents expressed concern about the safety of their deposits in banks, with almost 20% indicating that they were "very concerned." The results of the poll are concerning, as they mirror the level of worry that was observed during the 2008 financial crisis when several financial institutions collapsed.
The current situation is particularly worrying for uninsured savers, with experts at the Hoover Institution think tank warning that the withdrawal of all their cash could potentially put 186 American banks at risk of impairment. Although these banks have a total asset value of $300 billion, they represent less than 5% of the 4,135 FDIC-insured commercial banks in the United States.
Furthermore, the recent share price slump of PacWest, Western Alliance, and First Horizon has raised concerns about their financial stability. According to a recent article in the UK's Telegraph, over 2,315 banks in the United States are currently in a situation where their liabilities exceed the value of their assets. This has further complicated the overall situation. This alarming revelation was based on research published in April by Stanford University banking expert Amit Seru.
Overall, these developments are likely to further erode public trust in the banking industry. It is essential that banks take appropriate measures to address these concerns and ensure that their customers' deposits are safe and secure. In the wake of the 2008 financial crisis, many banks introduced measures to protect themselves from collapse, such as stress testing their balance sheets and increasing their capital reserves. It remains to be seen whether such measures will be sufficient to protect the banking industry from another crisis. However, it is clear that banks must work to regain the public's trust and demonstrate their commitment to financial stability and responsible banking practices.