By Seth Maloney | 0 comments
The banks have failed. No, we're not really going to hear it screamed on the streets, but the only profits they're making are the tens of billions in subsidies that taxpayers are shoveling into them every year.
3 cents of every tax dollar collected goes to subsidizing "too big to fail" banks
That's 3% of the total taxpayer pie going to help out an industry that already controls $9 trillion, or roughly half of the US economy. This amounts $83 billion, three-quarters of which goes into JP Morgan, Bank of America, Citigroup, Wells Fargo & Co, and Goldman Sachs. But what if those subsidies were taken away?
Seen below is a chart generated by Bloomberg, show the typical annual profit, values of subsidies, profits without subsidies, and the return on equity without a subsidy. The results are pretty sad.
You get the picture rather quickly. It's bad, and their profits are literally transfers from taxpayers to their balance sheets. Without that, some of them are even in the negative - Citigroup by over $4 billion.
So what would happen if we removed those subsidies? To start, we could cancel sequestration. That sits at $85 billion (two billion more than these subsidies), and has real impacts on the daily lives of Americans across the entire country, and the half of the economy not controlled by the banks.
Another effect of cancelling these subsidies could be the end of "too big to fail". Forcing the banks to actually act responsibly and get their own profits would be a great step towards forcing them to act in the markets.
But no, we live in the times of crony-capitalism. It's going to take brave progressives like Elizabeth Warren to take on the banks.
Also, thank Dumbledore for the title.
Categories: Economy and Jobs
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