Arlington, VA, September 19, 2018 – Stand Together Trust released a poll today that reveals a decade after Congress’ passage of the Troubled Asset Relief Program (TARP)—precipitated by the collapse of Lehman Brothers Holdings Inc. and American International Group Inc. (AIG)—Americans regard the bailout for financial institutions with skepticism. They also overwhelmingly believe that TARP set the stage for even more taxpayer support in the future.
Seventy-five percent of respondents said that companies take advantage of the expectation of being bailed out, and nearly 70 percent of respondents said they believe bailouts increase the likelihood of future taxpayer support. More than 60 percent said federal policymakers had other viable alternatives than government-funded financial rescues.
“A plurality of Americans agree that Washington made a critical mistake in not letting both Lehman and AIG fail,” said John Allison, former chief executive of BB&T Corp. “Having been intimately involved in these discussions in 2008, I can confirm what the public speculates—other options were on the table, but we chose to bail out reckless actors, a move likely to force taxpayers to come to the rescue once more in the future.”
The poll finds three in four Americans think bailouts in the 1970s, 80s, and 90s set an expectation at many large companies that they would be bailed out if anything went seriously wrong within their business or industry.
The poll finds that, while a plurality of Americans ultimately view the bailouts as having helped the United States, they also see the bailouts similarly to other subsidies or preferential treatment that benefits the politically well-connected. When asked whether they thought TARP was at all like other forms of government-provided financial support to companies, such as state and local subsidies for professional sports stadiums and Amazon’s proposed second headquarters, 57 percent of respondents said that the bailouts were similar to this type of support.
“More than two thirds of Americans thought that these bailouts would lead to more government support and preferential treatment for failing businesses and that companies would take advantage of this expectation for a handout,” said William Ruger, vice president for research and policy at Stand Together Trust. “Ten years after the bailouts, Americans are still deeply divided about whether they were harmful or helpful. But it looks like Americans are worried government is creating a system of winners and losers.”
We’re coming up on the 10-year anniversary of the Emergency Economic Stabilization Act of 2008, which created the Troubled Asset Relief Program (or TARP). These programs were designed to rescue banks during the financial crisis. Some may refer to them as the bank bailouts.
Looking back, do you think these bank rescues or bailouts were harmful or helpful for the country?
- 43 percent said they were helpful.
- 23 percent said neither harmful or helpful.
- 34 percent said they were harmful.
Do you think these bank rescues or bailouts were harmful or helpful for you personally?
- 22 percent said they were helpful.
- 54 percent said neither harmful or helpful.
- 25 percent said they were harmful.
Much news was made at the time that the government decided to rescue companies like AIG but let Lehman Brothers go into bankruptcy. What do you think should have been done?
- 46 percent said both should have been allowed to fail.
- 31 percent said what the government did was appropriate or prudent.
- 23 percent said the government should have rescued both companies.
Do you think there were viable alternatives to these government-funded financial rescues or bailouts?
- 61 percent said yes, there were.
- 40 percent said there were not.
Do you think financial institutions and banks are managed better or worse today than in 2008?
- 46 percent said they are managed better.
- 35 percent said they are managed the same.
- 19 percent said management is worse than it was before the bailouts.
Do you think financial institutions and banks serve customers better or worse today than in 2008?
- 43 percent said customers are better served.
- 33 percent said service hasn’t changed.
- 25 percent said service has gotten worse.
Besides the rescue of banks, or the bank bailouts, there were bailouts and involvement in other industries as well during the financial crisis. For example, Chrysler received guaranteed loans from the federal government and was forced to restructure the company’s debt. Some may refer to this as a bailout of Chrysler. Looking back, do you think this was helpful or harmful for the country?
- 48 percent said it was helpful.
- 22 percent said neither helpful or harmful.
- 31 percent said it was harmful.
During and after the financial crisis there was much said about ending “too big to fail.” This was the idea that: 1) A banking institution could be so big that the government is essentially forced to rescue it in a crisis to prevent a cascading collapse of the whole financial system, and 2) Banks got big specifically because they expected to be bailed out. Do you think “too big to fail” is or is not still a problem?
- 72 percent said yes, it is.
- 22 percent said no, it is not.
- 7 percent said they did not know.
When you think of government rescues or bailouts of any company, do you think it’s mainly to benefit employees, shareholders, creditors, consumers of the products of that company, or management of the company?
- 31 percent said shareholders.
- 28 percent said management.
- 15 percent said employees.
- 11 percent said consumers.
- 9 percent said creditors.
Do you think the financial rescues, or bailouts, of 2008 are at all like other forms of government-provided financial support to companies, such as state and local subsidies for professional sports stadiums or Amazon’s proposed second headquarters?
- 57 percent said yes, they were.
- 37 percent said they were not.
- 6 percent did not know.
Some people claim that the government rescue of financial institutions, or any company, increases the likelihood of future bailouts. Do you think that is true or not true?
- 68 percent said yes.
- 27 percent said no.
- 5 percent were not sure.
Some people have argued that previous bailouts in the 1970s, 80s, and 90s set an expectation at many large companies that they would be bailed out as well if anything went seriously wrong, which led to the bailouts of 2008. Do you think companies take advantage of this expectation, or do you think companies do not take advantage of this expectation?
- 75 percent said yes, companies do take advantage of the expectation of being bailed out.
- 22 percent said companies do not take advantage of this knowledge.
- 3 percent said they do not know.
Do you think the world would be a better or worse place today if the financial rescues, or bailouts, of 2008 did not happen?
- 46 percent said it would be a better place.
- 43 percent said the world would be a worse place.
- 11 percent did not know.
A leading survey research firm, Survey Sampling International, fielded the nationwide survey from September 5 to 9, 2018. The survey had 1,000 total respondents. About half of respondents were surveyed using random phone dials, with half of those being land-line and the other half being cell phone. The other half of respondents were surveyed using Survey Sampling International’s opt-in web-based survey panel. Results are weighted using broad geographic region, education, race and ethnicity, age, and gender to approximate representation of the U.S. public defined by the U.S. Census. The survey has an estimated +/- 4 percentage points margin of error for the national sample.