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Less Than One-Fourth Of Americans Trust Financial System, Says Finance Survey

Fewer than one-fourth of Americans trust the current financial system, accordi

Trust in the financial system

The index found that only 21 percent have trust in the system, which is the lowest value for the reading in the history of the measure, which has been calculated since March 2009. The index is derived by gauging public opinion in three-month periods in order to see how the perceptions of the participants change.

The most recent report is the fifteenth version, and its results are derived from a survey that was conducted in June 2012. During the previous version of the survey provided in March 2012, only 22 percent of the people who took part in the poll indicated trust in the system.

Trust in banks

"Trust in banks has collapsed," Paola Sapienza, co-author of the Financial Trust Index and the Merrill Lynch Capital Markets Research professor of finance at the Kellogg School of Management at Northwestern University, said in the statement. "Since last quarter's issue of the Financial Trust Index, trust in banks has fallen five percentage points to a low of 27 percent. It's worth noting that this data was collected in late June, so this drop could be reflective of consumer attitudes toward the news about JP Morgan's multi-billion hedging losses announced in late spring."

The trust that participants had in national banks dropped to 23 percent in the June 2012 version of the report from 25 percent in March. In contrast, the trust in local banks rose to 55 percent from 51 percent and the trust of respondents in credit unions rose by 5 percentage points to reach 63 percent from the previous reading of 58 percent.

"This suggests that the national banks may be 'too big to trust,' whereas there is still a relatively high level of trust in banks at the community level," Luigi Zingales, co-author of the Financial Trust Index and the Robert R. McCormack Professor of Entrepreneurship and Finance at the University of Chicago Booth School of Business, said in the statement.

Survey timing and sample

The survey was conducted between June 20 and June 28, and involved 1,029 respondents. This period was shortly after it was disclosed that JPMorgan Chase had lost billions of dollars as a result of derivatives bets made by its chief investment office.