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How the big banks got a reputation makeover

Rick Newman
The Exchange
WASHINGTON, DC - JUNE 19: JPMorgan Chase & Co Chairman and CEO Jamie Dimon testifies before the House Financial Services Committee on Capitol Hill June 19, 2012 in Washington, DC. After testifying before the Senate last week, Dimon answered questions from the committee about his company's $2 billion trading loss earlier this year. (Photo by Chip Somodevilla/Getty Images)

If J.P. Morgan Chase (JPM) flooded the Gulf of Mexico with oil or left passengers stranded on a runway for hours, would its reputation improve?

Maybe not, but the Wall Street bank and its Teflon CEO, Jamie Dimon, have shown an uncanny ability to prosper amid the kind of bad publicity that would sink other companies. J.P. Morgan has agreed to pay an eye-popping $20 billion in fines and penalties since the start of 2013, mostly relating to its role in the 2008 financial meltdown and the Bernard Madoff Ponzi scheme. Yet the bank’s reputation improved considerably last year, according to “buzz” scores calculated by polling firm YouGov BrandIndex. J.P. Morgan, in fact, was the fourth-most-improved brand tracked by YouGov. Apparently earning $18 billion per year, with a 19% profit margin, keeps people happy, no matter how often you get sued.

The banking industry as a whole has made a surprising comeback in the hearts and minds — well, at least the minds — of American consumers since the Wall Street bailouts of 2008. Just a few years ago Wall Street hijinks threatened to wreck the entire world economy, with President Obama publicly deriding the “fat-cat bankers,” even though some of them helped finance his 2008 presidential campaign. And Rolling Stone famously described Goldman Sachs (GS) as “a great vampire squid wrapped around the face of humanity.”

A softer side for the vampire squid

The vampire squid has since developed a softer side. Goldman Sachs is the second-ranked buzz improver in the YouGov rankings (after recently bankrupt American Airlines), with three financial firms — Bank of America (BAC), Morgan Stanley (MS) and Citibank (C) — included in the top 10. Those five banks combined got $165 billion in bailout money in 2008 and 2009, and while they paid it all back, the financial meltdown and subsequent bailouts were a PR nightmare for the financial industry. Confidence in banks, as measured by Gallup, plunged from 53% in 2004 to 22% in 2009.

A trashed reputation cut into the financial industry’s political clout, allowing Congress to pass the Dodd-Frank financial reforms in 2010, despite arduous lobbying against them. Banks didn’t help themselves by cranking up consumer fees, such as Bank of America’s aborted 2011 plan to charge customers $5 per month to access their own money with a debit card. The low point for banks came in 2012, when Gallup’s confidence measure bottomed out at 21%.

Bank reputations rebounded in 2013, probably due to an improving economy, fading memories of 2008 and promotional campaigns that finally clicked. As YouGov notes, J.P. Morgan, Bank of America and Citi all ran feel-good ad campaigns in 2013, touting the ways they help families and communities. For the first time since 2008, consumers may have bought the schmaltz. It probably didn’t hurt that Congress became Public Enemy No. 1 in 2013, ranking lower than head lice or cockroaches in one popularity poll and basically making fat-cat bankers look good.

Banks still have more work to do. The average YouGov buzz score for banks — based on ongoing surveys with thousands of consumers — was -0.2 last year, which means poll respondents had a slightly more negative than positive view of banks. And all five of the most-improved banks still had a negative score. J.P. Morgan, for instance, went up from a -12.3 buzz score in 2012 to -6.5 in 2013, but it was still far behind top-ranked Amazon (AMZN), which had a buzz score of +30.6. Rounding out the top five were Ford (F), Subway, the History Channel and Lowe’s (LOW) — none of which have received a government bailout or come close to ruining any nation’s economy.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.