A savings box shaped like a safe is pictured in front of wall safes at Hamburger Stahltresor GmbH in Hamburg March 5, 2009. (REUTERS/Christian Charisius)
Do Big Banks Have a Competitive Advantage from Government Policies?
July 28, 2014,
In a matter of days, the Government Accountability Office (GAO) will release a report on what economic advantages, if any, are enjoyed by banks considered “too big to fail.” Authored at the request of Senators Sherrod Brown (D-Ohio) and David Vitter (R-La.), the GAO report will shed light on the effects and complexities of “implicit subsidies” often received by larger banks. In advance of the report, Brookings Economic Studies Fellow Douglas Elliott has provided an excellent primer on implicit subsidies—what they are, why we care, and what questions need answering before we decide whether or not to break up, or heavily penalize, the largest banks. We’ve pulled out some highlights from the primer below, but you can read it in full here.