To End Big-Bank Subsidies, Fix the FDIC’s ‘Off’ Switch

By Karen Petrou

The unanimous Senate vote last year mandating a Government Accountability Office study of the subsidy allegedly enjoyed by the largest banks sent the clearest possible signal that both sides of the aisle think the “too big to fail” problem is as bad as ever.  So far, much industry attention has focused not on this subsidy, but rather on one response to it – the Brown-Vitter legislation. The bill raises many important questions, but the “subsidy” premise lies not just at its root, but also as the base rationale for many regulatory actions far more likely to happen first.