02-27-2018, 09:00 PM
Look at how much subsidy lowers big banks’ borrowing costs. Two researchers, Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz, put the number at about 0.8 percentage points.
The discount applies to all their liabilities, including bonds and customer deposits. Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $ 83 billion a year.
To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.
The top five banks - JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. account for $ 64 billion of the total subsidy, an amount roughly equal to their typical annual profits.
In other words, the banks occupying the commanding heights of the U.S. financial industry with almost $ 9 trillion in assets, more than half the size of the U.S. economy, would just about break even in the absence of corporate welfare.
In large part, the profits they report are essentially transfers from taxpayers to their shareholders.
The discount applies to all their liabilities, including bonds and customer deposits. Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $ 83 billion a year.
To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.
The top five banks - JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. account for $ 64 billion of the total subsidy, an amount roughly equal to their typical annual profits.
In other words, the banks occupying the commanding heights of the U.S. financial industry with almost $ 9 trillion in assets, more than half the size of the U.S. economy, would just about break even in the absence of corporate welfare.
In large part, the profits they report are essentially transfers from taxpayers to their shareholders.