Shock! Taxpayers funnel $83 billion to banks

Brinks Job posterFeb. 26, 2013

By John Seiler

Wonder where your tax $$$$$ go? Well, $83 billion a year goes to the Big Banks. Bloomberg reports:

“Banks have a powerful incentive to get big and unwieldy. The larger they are, the more disastrous their failure would be and the more certain they can be of a government bailout in an emergency. The result is an implicit subsidy: The banks that are potentially the most dangerous can borrow at lower rates, because creditors perceive them as too big to fail.

“Lately, economists have tried to pin down exactly how much the subsidy lowers big banks’ borrowing costs. In one relatively thorough effort, two researchers — Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz — put the number at about 0.8 percentage point. The discount applies to all their liabilities, including bonds and customer deposits.

“Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $83 billion a year. To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.

“The top five banks — JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. — account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry — with almost $9 trillion in assets, more than half the size of the U.S. economy — would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.”

You’re paying for it

Now, the Jan. 1 “fiscal cliff” tax increase, agreed to by both President Obama and the Republican leadership in Congress, boosted our taxes $60 billion a year. Obama and the Democrats insisted they would raise taxes only on the rich, who must be forced “to pay their fair share.”

Surprise! Instead, middle-class taxes went up. The payroll tax was boosted 2 percentage points, more than $1,000 a year for most Americans.

And that $60 billion funds most of the Big Banks’ $83 billion tax ripoff. So the rich gained in the end — at the expense of the middle class.

Actually, the only “surprise” at this point is that anybody is surprised that Obama, Pelosi, Boehner, McConnell and the other bipartisan “leaders” in Washington are on the side of the Big Banks that bankroll their campaigns, and against the taxpayers who are enslaved to pay for everything.

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  1. Dyspeptic
    Dyspeptic 26 February, 2013, 14:49

    Oh to be a Bankster. What a sweet life it must be.

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