About That $83 Billion Bank Subsidy. We Still Mean It.

Our estimate that the largest U.S. banks get a taxpayer subsidy worth about $83 billion a year remains a subject of some interest. Notably, Dealbreaker's Matt Levine posted a response to our response to his response to our original editorial.

In the latest installment, Levine makes the interesting observation that even poorly rated small banks enjoy lower overall funding costs than big banks. Specifically, he selects a group of small banks with BBB-minus credit ratings, and finds that they pay about 0.2 percentage point less to borrow money than do the five largest U.S. banks by assets. From this, he concludes that the big banks don't get a subsidy, but actually pay more for their bigness.