Why Should Taxpayers Give Big Banks $83 Billion a Year?

Bloomberg

So what if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

The top five banks -- JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry -- with almost $9 trillion in assets, more than half the size of the U.S. economy -- would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

I hope people let that sink in... our tax dollars are the Big Banks profits aka share holder earnings.

The argument talked about in the article is the same one anyone who has been following the practices of large banks since the collapse in 2008... that bigger banks equate to more borrowing power in the global economy and that subsidies keep banking rates low for customers. But shouldn't the success of a bank be measured on their ability to do that on their own? To be a large enough presence in their Market to have low prices and be globally competitive? Why are our tax dollars that determining factor vs the merit of their business models and executives?

I like the author's take:

Regulators can change the game by paring down the subsidy. One option is to make banks fund their activities with more equity from shareholders, a measure that would make them less likely to need bailouts (we recommend $1 of equity for each $5 of assets, far more than the 1-to-33 ratio that new global rules require). Another idea is to shock creditors out of complacency by making some of them take losses when banks run into trouble. A third is to prevent banks from using the subsidy to finance speculative trading, the aim of the Volcker rule in the U.S. and financial ring-fencing in the U.K.

If you want to buy shares in a bank why I should I be responsible for making sure you get a profit? It's your money, your choice to risk it. Yet somehow we have arrived at a place or we're realizing that we are at this place of coddling millionaires and billionaires by way of guaranteeing they profit when they take a risk. Sort of like how we promise all 5 year olds a trophy for being on a sports team.

reply to post by Kali74


You know Kali that I have been one of the few here that has been posting all the information on the so call QEs whenever a topic comes about.

This is what the bailout to the big banks is call this days.

Still all those to big to fail in further investigation of their liquidity vs their trash access they all bankrupted, but the government and Wall Street make look like their are thriving, after all they control most of the pension and retirement accounts of the government of the US so you can not make the people start going into a panic because the ones investing your hard earned dollars have nothing to back it up but the billions that they are squeezing out of the tax payers with the Fed buy out.

People have not clue how things are run in this nation, if they knew, they would not be sitting at home.

Get ready because the 83 billion will keep growing as the QEs become infinitive, remember who control the Government in the US.

reply to post by Kali74


You know people could shut down all banks at anytime?

If everyone pulled their money from the banks on the same day, there would be no more banking big wigs like there are now....

Just like police, government, etc......The money that is "theirs" is in all actuality OURS that they use for profit......

I just get to angry by this to be able to post a comment that is of any value to a discussion....
2nd

reply to post by Kali74


If it makes you feel any better, the tax payers doing this haven't been born yet. The current tax payers are barely paying the interest on the debt from decades ago. Anyway, we passed the last exit a while back, it's all Monopoly money now. Get your gold and silver while you still can

reply to post by marg6043


It seems like an inescapable trap doesn't it. At what point does the shop owner tell the 'protectors' to screw themselves, knowing full well they will come back with baseball bats? Lose everything to gain back control of your life.

reply to post by Chrisfishenstein


The problem with that is half our nation doesn't see anything wrong with this, they tell us we're the ones waging class war and ask us how dare we attack the rich?

reply to post by LiberalSceptic


I know how you feel, it's rare these days that I can put an OP together or even half the time a post because I'm just too angry to be articulate... once in a great while though that anger can focus me like a laser.

Why Should Taxpayers Give Big Banks $83 Billion a Year?,

We should not have to bail out banks period.

That being said, they have become such a integral part of this wobbling structure we call an economy, that taking no action to prevent their collapse is detrimental to everyone’s wellbeing.

Through our lack of willingness to persecute and through active lobbying, these institutions play almost as large a role as the citizens of the country.

reply to post by MDDoxs


These aren't even bailouts.
They're subsidies we've been giving banks since de-regulation.
They get bailouts on top of this.

Originally posted by Kali74
reply to post by MDDoxs

 

These aren't even bailouts.
They're subsidies we've been giving banks since de-regulation.
They get bailouts on top of this.

edit on 22-2-2013 by Kali74 because: (no reason given)

Quite true. My apologies, I used the term "Bail out" in a very broad and all-encompassing fashion.

None the less, as I suggested previously, the banks have become so engrained in western nations, which when you come to think of it is inherent to the type of system we support, that we can’t risk losing them or them suffering any kind of lose.

We would really have to hit the reset button if we could get away with not catering to the Banking industries every need and I agree it’s sickening

Originally posted by OptimusSubprime
reply to post by Kali74

 

If it makes you feel any better, the tax payers doing this haven't been born yet. The current tax payers are barely paying the interest on the debt from decades ago. Anyway, we passed the last exit a while back, it's all Monopoly money now. Get your gold and silver while you still can

Many prefer guns and bullets to gold and silver. When SHTF good luck with all that gold and silver.

here we might as well give them the money...
unlike Iran where they execute fraudsters of that magnitude

reply to post by MDDoxs


It's overwhelming that's for sure. I think we should be demanding a reset button, I don't think there's any way around it anymore... it will happen eventually because we are spending trillions we don't have and we can't just keep going on like that forever. The question is how much suffering is going to be allowed to happen before we hit reset? How long are we going to tell the working poor and the unemployed that they're lazy and thus worthless while we excuse, subsidize and apologize for millionaires and billionaires and grant unknown amounts of money to the MIC to build ever newer and more efficient killing machines so that we can pave more roads for these same corporations and banks that keep screwing us.

Oops I ranted

I'm with you Kali. Why do we keep giving the banks money? All it is doing is artificially inflating the stock market while the people continue to suffer with no end in sight. It's sickening. But that's not all! The people are actually OK with all of this! The lunacy shows no end. How can the people be ok with these banks getting welfare yet denounce their fellow citizens when they need a handout?

This whole economic system is a horse that broke all four of its legs, let them heal, and is wobbling along. Yet instead of doing the real fix (letting these banks collapse) we are continuing to inject the horse with morphine hoping that its legs will miraculously heal back to full. I've really lost all hope for change from this administration or any ones after it. Our government is no longer our government, its the banks' government.