Large
banks with more than $100 billion in assets are borrowing at interest
rates 0.34 percentage points lower than the rest of the industry. Back
in 2007, that advantage was only 0.08 percentage points, according to
the FDIC. Such differences can cause huge variance in borrowing costs
given the massive amount of money that flows through banks.
Here is the article and I thank Ralph S. for the pointer.
I have been for seriously breaking up all those banks that are
“too big to fail,” but for a variety of reasons, that has not
been practically on the agenda and does not look like it will
happen, and clearly the big banks that have survived this so
far have more power than ever.
“I don’t have a problem with banks being big, I have a problem with politicians thinking they shouldn’t be allowed to fail.”
But think about the orphans and other vulnerable people. How could you say such an inhumane thing?
But you supported the bailouts in your New York Times article last year…
So if/when all the small banks go out of business in orderly FDIC takeovers, replaced in market share by the bailed-out-behemoths, I suppose that will be superior to contagion.
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