Bank of America and Citigroup Would Likely Be Dead Without “Too Big To Fail” Subsidy
Here’s the problem: Wall Street banks can borrow money for less than other financial institutions largely because creditors see them as “too big to fail.” Specifically, according to scholars at the IMF, the biggest banks get an implicit subsidy of around 0.8 percentage points.
Now, 0.8 percentage points doesn’t sound like much, and it’s not for typical Americans. But for banks that have trillions in assets, 0.8 percentage points can add up to billions. 
Bloomberg, in their image above, shows that without these implicit multi-billion-dollar subsidies Bank of America and Citigroup would be bleeding. In short, too big has failed.
