The Value of the “Too Big to Fail” Big Bank Subsidy

Dean Baker and Travis McArthur

CEPR Reports and Issue Briefs from Center for Economic and Policy Research (CEPR)

Abstract: One outcome of the TARP and other bank rescue efforts following the collapse of Lehman Brothers in September of 2008 is that the United States has essentially formalized a commitment to a “too big to fail” (TBTF) policy for major banks. This paper uses data from the FDIC on the relative cost of funds for TBTF banks and other banks, before and after the crisis, to quantify the value of the government protection provided by the TBTF policy.

Keywords: Federal Reserve; Treasury; banks (search for similar items in EconPapers)
JEL-codes: E E5 E58 G G2 G21 G24 G28 H H2 H25 (search for similar items in EconPapers)
Pages: 5 pages
Date: 2009-09
New Economics Papers: this item is included in nep-ban, nep-fmk, nep-pke and nep-reg
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Citations: View citations in EconPapers (44)

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Persistent link: https://EconPapers.repec.org/RePEc:epo:papers:2009-36

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