The $780bn+ of annual subsidies to the big banks need to be taken away

Whalen notes today that the big American banks get a subsidy in excess of $780 billion dollars per year.

Specifically, Whalen estimates the following types of subsidies to the giant banks:

• $360 billion in Federal Reserve subsidies, by creating an artificial “spread” in interest rates (Bloomberg, Business Insider, Huffington Post, and many other publications have documented that the government is subsidizing big banks with artificial and guaranteed “spreads”, where the banks borrow cheaper than any consumer can, and then lend the money back to the government at much higher interest rates.)

• $120 billion in federal deposit insurance (through the FDIC, backed by the Treasury)

• At least $100 billion in government-guaranteed loans, especially mortgages

• At least $100 billion in monopolistic advantages in the secondary market for home mortgages. Specifically, the government subsidies the big banks to steal away fees earned from smaller banks, gain on sale into the TBA market and servicing. Whalen quotes a veteran banker explaining:

The smaller players lived on the bleeding edge of the mortgage market, but they were also far more efficient lenders than the large banks. Now, care of the Fed, we have a highly inefficient oligopoly in the US mortgage market that is built around the largest banks.

• More than $100 billion in fees in the over-the-counter (OTC) derivative market. Whalen explains

The lack of capital required in these transactions and other special dispensations from the Fed provide the zombie banks with unlimited leverage and almost no public scrutiny. The fact that OTC contracts are exempt from the automatic stay in bankruptcy is a huge subsidy. The bilateral market structure is another.

That totals $780 billion per year.

But Whalen notes that there are many other subsidies as well:

Read more at :- 

http://www.washingtonsblog.com/2013/03/top-banking-analyst-subsidies-to-giant-banks-exceed-780-billion-year.html 

N.B. This article does not mention some other large subsidies to the big banks. 

The Fed is currently spending $480bn on buying up mortgage backed assets from the big banks at far more than they are worth in QE3. 

The Fed is spending $520bn a year on buying longer dated treasuries in QE to infinity. This is free money to the big banks who are using it to speculate with and pushing up the price of food & gas (and stocks). 

70% of February's official inflation was due to increases in the prices of food & gas.

Take ALL of the current subsidies to the big banks away - they are INEFFICIENT and a complete liability to America. 

This would allow smaller better run and managed smaller banks and credit unions to fairly compete. 

It would take business away from the big banks and force them to slim down.     

The big banks are holding the entire country to RANSOM. 

Reinstate Glass Steagal immediately. 

Remove ALL of their over $1tn a year subsidies. 

Prosecute the big banks for their multiple crimes - Libor fixing, money laundering, mortgage fraud, robosigning etc. Fine them $200bn+. Send the execs to jail for 30 years+. 

Madoff got 102 years for his crimes. 

The execs of the big banks have stolen far more than Madoff ever did.

Split the big banks up.
Prosecute them for their multiple crimes.

Force them to slim down. 

Then SHUT THEM DOWN.  

They are criminal enterprises, a complete liability to the economy and holding the country to ransom.