It’s Time to Forgive the Big Banks

Consumers still blame big banks for many of their economic woes. But it's time to move on.

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Big banks have had an image problem since the financial crisis. Americans overwhelmingly blame them for the mess, and some still feel strongly enough that they have pangs of guilt even thinking of doing business with the largest financial firms.

It’s not hard to understand why. Books like Michael Lewis’ best-selling The Big Short make clear how giant institutions blew it for many of their customers and fed the meltdown. When the banks themselves got into trouble, they received a taxpayer bailout. This is all well trodden territory. Still, it’s notable that negative consumer sentiment remains so strong.

Six years later, 78% of Americans say big banks are to blame for the recession and 66% remain angry about it, according to a consumer banking insights study sponsored by a coalition of community banks and Kasasa. In the survey, half say it is important to bank locally and a quarter say they sometimes feel guilty bringing their business to a big bank.

Yet some of this anger and dissatisfaction may be misplaced—and it appears that big banks are beginning to get that message across. Customer satisfaction with banks in general is rising, according to the 2013 Banking Satisfaction Study from J.D. Power. The company’s bank satisfaction index rose 10 points to 763 on a 1,000-point scale. Smaller banks still score higher in areas that include fees and problem resolution. But the biggest gains were among the largest banks. They are closing the gap by making fees more understandable and by better explaining their services.

If you have ever traveled overseas, you already know the value of an account with, say Citibank, which has no-fee ATMs in more than 40 countries. Bank of America, through its Global ATM Alliance, offers no-fee ATMs throughout Europe and other regions. These giant banks and others like Wells Fargo and J.P. Morgan Chase also have tens of thousands of ATMs in the U.S., a convenient feature that community banks can’t match.

On the other hand, local banks tend to have sharply lower checking fees, more personalized service and significantly more lending flexibility. For a small business loan or many types of mortgages smaller institutions may be the way to go. Community banks and credit unions also tend to keep their assets in the neighborhood, which has a certain appeal. Among those who say it is important to bank locally, more than half cite the benefit to the local economy, according to the banking insights study.

There is no question that big banks played a major role in the financial crisis. As long as Americans continue to feel the sting of that downturn the big banks will feel the ire of some consumers. A third of those who favor small banks do so simply to register their discontent with big banks, having nothing to do with products or services. It’s just a protest.

Well, okay. But they might be better off softening that stand. For one thing, six years after the meltdown consumers would do well to consider their own role in the mess—no emergency fund, too much credit card debt, too little attention to the financial contracts they signed. There’s plenty blame to go around. Today, many big banks (and some smaller ones) offer tools and programs to help educate consumers and raise the public’s financial I.Q.

Certainly, small banks have many advantages. There are ample reasons to use them apart from any desire to penalize big banks. My mortgage is through a small bank and I could not be more pleased. But big banks will always be there first with cutting edge technology, as was the case with remote check deposit and mobile banking. And if you ever find yourself in Buenos Aires without enough pesos, as I recently did, you’ll be thankful for that Citibank ATM around the corner offering unfettered no-fee access to your cash, in blessed English.


Um, we'll forgive them when a) the people who are criminally liable are actually charged and convicted; b) there is meaningful bank regulation legislation, like putting a Glass-Steagal-type separation of investment banks and retail banks back in place; c) when we get a sense that investment banks have actually accepted their responsibility and make changes.


So big Banks paid Time how much to run this article?


I think it would be a lot easier to forgive if the affects of the melt down were not still affecting everyone. The QE is not trickling down and this policy clearly favors Wall St. over Main St. and it continues.  Americans have become a lot brighter they understand the exceptionally low interest rates they receive are a direct result of these policies. Not all American's over bought and over charged yet they are punished as a result of other's misdeeds. 

We also know the banks pay a fine (bribe) and receive a get out of jail free card, in other words unequal justice. The common man would be locked up for years if they committed a crime that's far less egregious - and affecting not nearly as many. Too big to jail this coming from Holder makes a mockery of our justice system and proves jail is only for the little guy who can't pay off the politicians with donations.


Many people were hurt by the macroeconomic effects of the financial meltdown and many others suffered financial ruin due to the fallout. Ordinary individuals did not and could not have purchased the derivative financial instruments that caused the system to implode even if they wanted to, and most did not even know these products existed. 

Despite that bankers caused the mess they were bailed out; given a pass on both their own criminal behavior and the downside of their own incompetence. 

The very worst thing that could happen is for the public to "forgive" the banks and allow them to return to the behaviors that nuked the economy. There has been no accountability: market discipline was reserved solely for the "little people." 

We must not forgive. We must not forget. We must fix the problem so that it never happens again.


@MichaelOlenick  - How right you are!!!  Never forget!  I teach and classes are larger because of budget cuts to education.  They must think we are all FOOLS!!!!