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Financial Planning > Behavioral Finance

Give Us Tougher Financial Reform, Americans Say

By Melanie Waddell

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Nearly five years after the financial crisis and three years since passage of the Dodd-Frank Act, Americans across lines of race, age, geography and political affiliation who “strongly” support tougher rules for Wall Street jumped 10 percentage points over those favoring such reform last year, according to a study by Lake Research Partners.

The survey of 1,004 likely 2014 voters, conducted between July 8 and July 11 on behalf of Americans for Financial Reform, found that 83% of likely voters support stronger rules and enforcement, compared to 9% who said the financial world has changed its ways and doesn’t need further reform. In 2012, the pro-reform position was favored by 73% of those surveyed, while in 2011 the figure was 77%.

The survey also found that nearly two-thirds (63%) of those polled identify with the view that Wall Street must be held accountable and prevented from repeating past actions; even among Republicans, only a minority (41%) identify with the opposing view that excessive regulation will hurt the economy, the survey found.

After hearing a short description, eight in 10 voters favor the Consumer Financial Protection Bureau, and nearly half (49%) “strongly” favor it.

Two recently introduced bipartisan bills—the 21st Century Glass-Steagall Act and the Brown/Vitter bill–attempt to make the financial system safer and more accountable.

The 21st Century Glass-Steagall Act, introduced July 12 by Sens. John McCain, R-Ariz.; Elizabeth Warren, D-Mass.; Maria Cantwell, D-Wash.; and Angus King, I-Maine, calls for an updated version of the old firewall between commercial and investment banking.

The Brown-Vitter bill, introduced in late April by Sens. Sherrod Brown, D-Ohio, David Vitter, R-La., would raise capital requirements for the biggest banks.

King wrote in an Op-Ed Sunday, that the 21st Century Glass-Steagall Act provides “a structural change to the banking industry rather than a regulatory one.” In the aftermath of the crisis, “Congress has made strong efforts to rein in Wall Street, but a growing chorus of voices are questioning whether these efforts, like the 2010 Dodd-Frank Act, will end the troubling phenomenon known as ‘too big to fail.’”

King wrote that the 21st Century Glass-Steagall Act is “a modern version of the Banking Act of 1933 (Glass-Steagall) that reduces risk for the American taxpayer in the financial system and decreases the likelihood of future financial crises.”

The bill would revive the original Glass-Steagall Act that was introduced in response to the market crash of 1929, King wrote by creating “a functional division between traditional banks” that have savings and checking accounts, and are insured by the Federal Deposit Insurance Corp., “and riskier financial institutions that offer services such as investment banking, insurance, swaps dealing, and hedge fund and private equity activities.”

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