Senator Warren: Why Isn’t Wall Street Paying Back Taxpayers For Being ‘Too Big To Fail’?

[ProSense]

Senator Warren: Why Isn’t Wall Street Paying Back Taxpayers For Being ‘Too Big To Fail’?

By Pat Garofalo

During a Senate Banking committee hearing today, Sen. Elizabeth Warren (D-MA) grilled Federal Reserve Chairman Ben Bernanke on whether Wall Street banks should have to pay back U.S. taxpayers for the implicit funding advantage those banks receive by virtue of being viewed as “too big to fail.” According to a Bloomberg News study, big banks are essentially subsidized by about $83 billion per year because investors anticipate that those banks will be saved by the government if they get in trouble.

“These big financial institutions are getting cheaper borrowing to the tune of $83 billion in a single year simply because people believe the government would step up and bail them out. If they are getting it, why shouldn’t they pay for it?” asked Warren:

WARREN: So I understand that we’re all trying to get to the end of “too big to fail.” But my question, Mr. chairman, is until we do, should those biggest financial institutions be repaying the American taxpayer that $83 billion subsidy that they are getting?…It is working like an insurance policy. Ordinary folks pay for homeowners insurance. Ordinary folks pay for car insurance. And these big financial institutions are getting cheaper borrowing to the tune of $83 billion in a single year simply because people believe that the government would step in and bail them out. And I’m just saying, if they are getting it, why shouldn’t they pay for it?

BERNANKE: I think we should get rid of it.

Watch it:

- more -

http://thinkprogress.org/economy/2013/02/26/1640871/warren-pay-taxpayers/

[Enrique]

1. so Bernanke wants to break up the banks?

if so, that's great news.

During Jack Lew's confirmation hearing, Warren should ask, "Bernanke says we should break up the banks. What about you?"

[ProSense]

3. It seems related to the $83 billion in subsidies. n/t

[Enrique]

9. that subsidy is from their too-big-to-fail status

the $83 billion is the higher rates they get due to the expectation that they will be bailed out. If Bernanke is saying we have to get rid of that, then it means he wants to end their too-big-to-fail status, i.e. break them up.

[sakabatou]

4. You owe me a new keyboard

[0zone]

5. Scuba's post was no way "over-the-top."

It was more like "below the belt" of DU community standards.

[winter is coming]

6. I love that she's asking the sort of questions that make the big banks squirm.

To some extent, banks and corporations rely on no one challenging the assumptions/assertions of Serious People. Any day someone points out the emperor's wardrobe is a good day.

[TheKentuckian]

8. Amen

[cilla4progress]

7. I love Sen Warren

with a heart that burns in my chest!!!

[reflection]

10. I really like Ms. Warren.

She asks all the right questions. I hope she keeps the light shining on these cockroaches.

[kentuck]

11. That's a pretty large loophole!

I think I would start there rather than cutting Grandma's Medicare? Then cut the oil subsidy to the Big Oil Companies. Then cut the tax breaks for Big Pharma and Big Farming and we would well be on our way to fixing our debt and deficit problems. Of course, Big Defense cut be cut by hundreds of billions without affecting our national security.