In previous posts I've cited studies estimating the cost to the US of the 2008 financial crisis and the value of the free guarantee that taxpayers provide to banks through the "too big to fail subsidy." Last month the New York Federal Reserve estimated the subsidy meant $60m-$80m of cost savings per average new bond sale over their smaller competitors.
Last week the IMF updated it previous estimates:
“In 2012, the implicit subsidy given to global systemically important banks represented up to $70 billion in the United States, and up to $300 billion in the euro area, depending on the estimates.”
As mentioned in earlier posts, this (US) subsidy is about the same size as profits by big US banks. Worse, these subsidies feed excessive risk-taking putting taxpayers at risk of bailouts like we saw in 2008. The new numbers feed into the ongoing US debate about whether to break up big banks and/or force them to hold more capital. The next high profile estimate will come from the US General Accounting Office mid year.