Over the past six editions of this Compendium, we have reported on a long series of conduct scandals and consequent regulatory enforcement actions and punitive sanctions in the US financial sector. Propagating seemingly unabated, these crises have been deleterious to public trust in banks, of course. But they have also eroded faith in banking sector regulators and in our institutions more generally. The bank failures of Spring 2023 have likely accelerated this decline.
A September 2023 American Banker article reported the results of the publication's annual reputation survey. It found that — as a consequence of the bank failures — US banks saw the highest decline in positive sentiment reported in the last five years, among customers and non-customers alike.1 Regional banks saw the largest drop. Customers expressed concern about financial stability and service quality, and were five times more likely than customers of larger banks to report a readiness to switch to another bank.
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