Skip to content
Subscriber Only

Fed Economist Says Big Bank Borrowing Advantage Increases Risk

The largest U.S. banks, including JPMorgan Chase & Co. and Citigroup Inc., have been able to borrow more cheaply in bond markets than smaller rivals, in part because of investor perceptions that they were too big to fail, according to a Federal Reserve Bank of New York researcher.

The five largest banks paid on average 0.31 percentage point less on A rated debt than their smaller peers, according to a paper released today by the Fed district bank based on data from 1985 until 2009.