The chart above comes from a piece penned by Bob Ivry, who explored the unfair advantages of the TBTF banks.

Note the chart shows how the ratings agencies would change their views — and credit ratings — of TBTF banks without the implicit promise of a bailout when any of these banks screw up. Another chart after the jump shows how bond buyers accept lower returns from TBTF banks given the governments implicit guarantees.

Ivry wrties:

“These six banks — Bank of America Corp. (BAC), Citigroup Inc. (C), Goldman Sachs Group Inc., (GS) JPMorgan Chase & Co. (JPM), Morgan Stanley (MS) and Wells Fargo & Co (WFC). — have also benefited from tax breaks and Federal Reserve largesse since the end of 2008 in the form of additional income from the central bank’s mortgage-bond purchases and the interest it pays for bank deposits.

All told, the financial advantages for the six biggest banks since the start of 2009 amounted to at least $102 billion, according to data compiled by Bloomberg.”

Its Socialism for the banks, Capitalism for the rest of us . . .




No Lehman Moments as Biggest Banks Deemed Too Big to Fail
Bob Ivry
Bloomberg Markets Magazine, May 10, 2013


Source: Bloomberg Markets Magazine


Category: Bailouts, Credit, Really, really bad calls

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

4 Responses to “Advantage: TBTF”

  1. drewburn says:

    What’s really funny is that these are the same guys who used to rail against Fannie and Fredie because of their implicit gov. backing.

  2. Frilton Miedman says:

    I find it simultaneously terrifying and humorous hearing the Ayn Rand / F. Hayek crowd lay claim to the notion that unregulated capitalism will blindly benefit everyone, that government is the problem and needs to be eliminated.

    BRIBED government is the problem, the Austrian notion is that corrupt police officers taking bribes to turn a blind eye equates to eliminating the police altogether…. simply let criminals, thieves and con men do what they do.

    Though a larger problem on the GOP side, it runs on both sides of the aisle – Goldman Sachs was one of Obama’s biggest contributors in 2008, coincidentally not one TBTF bank or rating co executive has faced criminal charges despite overwhelming evidence for blatant investment fraud.

    Goldmans was fined two days profit for Timberwolf, pennies on the dollar for the money they made and shareholders ate the price..

    Sadly, is now an investment tool, just look for which industries & corporations are making the biggest bribes to gauge future earnings & profit growth via tax breaks, subsidies and deregulation.

    Free market, my ass.

  3. mitchn says:

    No surprise here. BofA and Shitty have been the weakest American banks for at least a decade.

  4. jpmist says:

    $102 billion? Nah, that feels really really low.

    What about how the banks pay less for repo loans because they’re TBTF?

    And what about the intangible worth of being able to mark to make believe on their balance sheets?