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Advantage: TBTF

Posted By Barry Ritholtz On May 13, 2013 @ 12:18 pm In Bailouts,Credit,Really, really bad calls | Comments Disabled

Chart [1]


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 [2] for the rest of us . . .




No Lehman Moments as Biggest Banks Deemed Too Big to Fail [3]
Bob Ivry
Bloomberg Markets Magazine, May 10, 2013


Chart [4]
Source: Bloomberg Markets Magazine [3]


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2013/05/advantage-tbtf/

URLs in this post:

[1] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/05/iuhcmWgTWFWo.jpg

[2] Socialism for the banks, Capitalism: http://www.ritholtz.com/blog/2009/11/back-in-the-ussa/

[3] No Lehman Moments as Biggest Banks Deemed Too Big to Fail: http://www.bloomberg.com/news/2013-05-10/no-lehman-moments-as-biggest-banks-deemed-too-big-to-fail.html

[4] Image: http://www.ritholtz.com/blog/wp-content/uploads/2013/05/i7Aw0F91.y84.jpg

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