While most people will not join in public demonstrations, they are frustrated with economic morass and feel betrayed by banks and financial industry
The Occupy Wall Street demonstrators have been criticized for being permanent protesters, hippies and excitement seekers who can be ignored because they have no specific agenda.
But when I went to Zuccotti Park to listen to them, I heard something familiar: the same anger, betrayal and distrust of Wall Street that I am hearing broadly from readers of my column. And while it might make the financial industry more comfortable to portray the protesters as outside the mainstream, they and millions of Americans with the same gripes are having an impact. People are yanking money from stocks and mutual funds, dumping their brokers and their banks, and closing credit cards in disgust.
Astute bankers, fund managers and financial advisers understand this, or at least they should. While the protesters in New York, Chicago and elsewhere may look like scenes out of the Vietnam War protest era, and include more than their share of '60s activists, they are tapping into a deeply rooted sentiment with repercussions for society and the financial business.
As you enter the Zuccotti Park, you meet a senior citizen strumming protest songs he says he's been singing at demonstrations for five decades. And next to him is Fran Geteles, in a green T-shirt from the women's movement. "I'm so happy we found our voice" after a long drought in activism since the Vietnam War, she said.
But alongside these longtime protesters are everyday Americans like Sean Higgins, who worries about the financial stress he's seen in his home as well as his own potentially bleak future. As he finishes creating a sign saying, "When your credit runs out you will march with us," he explains that he's been working full time while going to college, because his mother hasn't been able to find a job for two years and his father has struggled with a small business.
As he completes a journalism and sociology degree at Westfield State University in Massachusetts, he wonders how he will cover $20,000 in college loans when there are so few jobs.
"This all comes down to a broken system that doesn't work for any of us," he said. The woman next to him holds a sign saying: "I awoke in a sweat from the American Dream."
Many people in the park sound like those who email me when I write about the markets and the economy.
They feel like they've done all the right things: worked hard, tried to save a little money in 401(k) accounts, put a roof over their families' heads and paid the bills, even if they weren't as careful about debt as they now know they should have been.
Then one day in 2008, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke charged into Congress and asked for $700 billion fast to keep the whole system from collapsing. As American taxpayers picked up the tab for the financial alchemy, people saw their world collapse anyway: jobs ended, foreclosures spiraled, 401(k) savings evaporated, small businesses couldn't get loans, and banks shut down credit cards when people needed them more than ever to get through tough times.
Now, about 17 percent of Americans who want full-time jobs are out of work or have accepted part-time employment to get by. Homes have lost about a third of their value.
Most of the people angry about this wouldn't join a demonstration, but they are as hostile toward what the protesters generally call Wall Street as those sleeping on the ground in Zuccotti Park.
For example, when the Federal Housing Finance Agency sued major banks in September for losses on mortgage bonds, a Downers Grove reader wrote me: "For many Americans this is an opportunity, figuratively, to stand up and applaud. … Finally a little retribution for the financial mess that was created by institutions that should have known better. It is clear to me that the greed that led to our present economic situation is alive and well within our financial community. They didn't get it then, and they don't get it now, and that is a very sorry state of affairs."
But while bankers continue to enrage their customers by denying loans, foreclosing on property and instituting new fees, the bankers also realize that the breakdown in trust is a threat to their businesses, said Northwestern University professor Paola Sapienza, who's been doing national surveys on trust since the 2008 financial crisis. She said banks and credit card companies are studying the mood and are using psychologists to interpret findings.
In her latest survey, only 32 percent of Americans said they trust banks. Confidence in the stock market and mutual funds is worse, explaining why individuals have fled stocks and stock mutual funds and starved firms that depend on their business. Only 16 percent say they trust the stock market, and 27.6 percent trust mutual funds.
"How many millions of investors and savers are now walking around with half-empty accounts from two years ago?" a Belvidere, Ill., reader wrote to me in a recent email. "I cannot believe people are not in the streets with pitchforks, and why some folks on Wall Street aren't in jail. Not one has been arrested for robbing the investors on the grand scale."
Wall Street analysts have assumed that once the stock market stabilizes, investors will recover their nerve and want to make money in the stock market again. In fact, as the stock market climbed last week for five days, Lipper analyst Tom Roseen said, "It was somewhat surprising to see mutual fund investors withdraw a net $2.6 billion from mutual funds."
But people do not merely fear losses. Some also feel betrayed by what they call Wall Street, and that extends to everything from banks to 401(k) plans. Sapienza has studied the breakdown of trust in financial companies in other parts of the world and found "it is very difficult to get anyone to come back through the door. They tend to want to keep money under the mattress."
This is a concern at the New York Stock Exchange Euronext, said Larry Leibowitz, chief operating officer of the exchange. "It's clear that confidence has been lost in the players of the financial markets," he said, and the loss of individual investors "matters a lot."
If individuals continue to shun stocks, Leibowitz said, it could restrain the growth of the U.S. economy.
Typically, young companies grow by raising capital through initial public offerings. But with individuals sitting on the sidelines, he said, "That's broken. IPOs are not happening the way they should."
Amid the anger, banks are trying to rebuild trust through advertising campaigns and meetings with journalists, but Sapienza says it will take more.
"The question is, will they walk the talk? Will the banks do something tangible for borrowers and convince people they are friendly?" she said.
If they do, it will cost them. If they don't, it might cost more.
gmarksjarvis@tribune.com
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