In a March 27 report, Moody’s displays a bar chart of its credit ratings for the banks in blue. In green bars, it shows Goldman Sachs and Wells Fargo would be rated two grades lower if the taxpayer backstop didn’t exist. Moody’s boosted Morgan Stanley’s score by two grades for the same reason, even though it had downgraded that bank in June 2012.
The scores for Bank of America, Citigroup and JPMorgan (JPM) are three grades lower in the green bars.
Debt sold by the holding companies of Bank of America and Citigroup (C), the second- and third-biggest U.S. banks by assets, would fall to junk status without the implicit government guarantee, Moody’s Senior Vice President David Fanger says.
Bloomberg is probably being too generous to the big banks, stating:
All told, the financial advantages for the six biggest banks since the start of 2009 amounted to at least $102 billion, according to data compiled by Bloomberg.
But top banking analyst Chris Whalen estimates that the big banks receive a subsidy of $780 billion dollars every year.
And everyone knows that virtually all of the giant banks’ profits come from various government subsidies.