As
she points out, to measure the size of the TBTF subsidy, it is necessary to
look at more than the DIRECT TBTF subsidy enjoyed by large banks. As she puts
it here (1):
"In
this context, it is also important to appreciate the role played by government guarantees for counterparties of banking institutions. In a
financial system with a complex network of inter- institution contracts, the
individual institution benefits not only
from government guarantees protecting
its own creditors but also from government guarantees protecting the counterparties
of those in which it invested. For example, the AIG bailout benefited many counterparties of AIG, not the least of these being the many banks that had
purchased credit insurance from AIG."
1. Statement
for Senate Committee on Banking, Housing and Urban Affairs Subcommittee on Financial Institutions and Consumer
Protection.
________
P.S. (29th Sept 2014). According this Huffington article, Goldman Sachs managed to help itself to $2.9bn of taxpayers' money as part of the taxpayer funded bail out of AIG.
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