Too-Big-To-Fail Banks Have Raked In $102 Billion In Subsidies Since 2009: Report

[limpyhobbler]

America's biggest banks want you to believe that they get no special advantage, no subsidies, from being too big to fail. And yet people keep finding evidence of those subsidies.

The latest is World Bank economist Deniz Anginer, in a study for Bloomberg Markets magazine. Anginer estimates that the six biggest U.S. banks have saved $82 billion in borrowing costs since 2009 because investors believe the government will never let them fail and thus don't charge as much to lend them money as they do smaller banks. The report will be published in the June issue of the magazine.

Together with dirt-cheap government borrowing programs, Bloomberg estimates these banks -- JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley -- have saved $102 billion since 2009 because of their size advantage.

This estimate is actually a little smaller than the $83 billion-per-year subsidy that Bloomberg View, Bloomberg's op-ed arm, touted earlier this year. In fact, several studies have come up with different numbers for the subsidy, evidence of just how tricky it is to measure.
...

http://www.huffingtonpost.com/2013/05/10/too-big-to-fail-subsidies_n_3252879.html

[dixiegrrrrl]

1. "subsidies" is a bit of a reach here.

As much as I am usually firmly against the TBTF banks, most people think of subsidies as money that is given, either directly or as tax breaks, to a business...think farm subsidies, or suspension of paying taxes.
But low borrowing costs as a subsidy...those affect anyone who borrows money.

You wanna talk Gov. subisides to banks?
How about the failure to prosecute them for any of the dozens of laws they have broken>
THAT's a subsidy!

[limpyhobbler]

2. That too.

It's kind of surprising there haven't been more prosecutions.

It seems like this report is talking about the specific marginal advantage that the TBTF banks are gaining over other financial actors based on the perception that the government will always bail them out.

[sabrina 1]

3. There is not question that crimes were committed and covered up by 'agreements' to pay what

are merely the equivalent of fines, when people who lost their homes illegally are now being insulted with offers of mere hundreds of dollars instead of the full value and punitive damages, of their stolen homes.

To allow such crimes to go unpunished cannot do anything other than create even more arrogance on the part of the criminals. Maybe we have to go through another crash before someone finally realizes that when let criminals off the hook, they only become more brazen in their willingness to do whatever is necessary to increase their profits.