Turns out that not only have you, the taxpayer, bailed out the "too big too fail" (TBTF) banks but you’ve likely given them a break over smaller banks. So, say the always-accurate folks at the Center for Economic and Policy Research in a new study:

In effect, because of the government safety net being extended to investors who lend money to these banks, the TBTF banks are able to borrow at a much lower cost than banks who must borrow based on their own credit worthiness. The increase in the gap of 0.49 percentage points implies a government subsidy of $34.1 billion a year to the 18 bank holding companies with more than $100 billion in assets in the first quarter of 2009. (See the appendix for the derivation of this calculation.)

   Hmmm…what happens to that "free market" ideology? Well, you hear that when it comes to executive compensation–"regulating pay is bad for the free market because we can’t attract the best talent"–but, when it comes to getting billions of dollars in subsidies, out the window go any complaints about that bad government regulation.

   My own view has been this: we should actually break apart the TBTF banking system and go back to smaller community and regional banks, a system where bankers are a lot more responsive to their local communities.