NYT: too big to fail is to big to exist
Too big to fail is too big to exist
New York Times
The Cost of Saving These Whales
Subsidies don’t stop when a bailout recipient repays a loan.
Because our government wouldn’t dream of calculating the hidden
costs associated with the bailout binge — taxpayers might become
even angrier than they already are — it is gratifying that
The Center for Economic and Policy Research, a liberal research group
in Washington, has taken a stab at the task.”
“From the beginning of 200 through the fourth quarter of 2007, the cost of funds
for smaller institutions averaged 0.29% more than that of banks with $100 billion
or more of assets. But from late 2008 through June 2009, when bailouts for large
institutions became expected, the spread widened to 0.78 of a percentage point.
The authors of the study estimate that as a $34B invisible subsidy to the visible
subsidy recipients, but it’s worse than that. It’s all unfair advantage versus
responsible institutions, and half a percent is huge in banking.
One might think that the biggest corporations in business don't really want any help and shouldn't be getting any breaks from working class individuals because they can afford it. At least that's the way it should work, but a recent Bloomberg article found the biggest banks in the nation basically only work if they get generous bank subsidy cash. The working class individuals are not aware that billions of dollars are being lost to sweetheart deals for banks. Check more here.