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The Editors

Bank Lobbyists Dispute $83 Billion Subsidy. They’re Wrong

The finance industry’s lobbyists have publicly challenged our estimate that the largest U.S. banks receive an annual taxpayer subsidy worth $83 billion. We’re glad for the discussion. Understanding this issue is central to fixing the global financial system.

In an editorial last month, we wrote that recurrent bailouts of the largest financial institutions have given them a unique advantage: They get a break on their borrowing costs, because creditors expect taxpayers to support them whenever they get into trouble. Making some reasonable assumptions and employing research by two economists, Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz, we put a dollar value on this too-big-to-fail subsidy.