Too big to fail is dead, but not as dead as it used to be

Photo: Scott Eells/Bloomberg/GettyLast week, the Government Accountability Office released a long-anticipated report on whether the nation?s largest banks get a subsidy for their bigness. A large subsidy would imply that the government would bail out the mega-banks if they get in trouble again.

So, will Washington come to the rescue once again? No, says the GAO. Although the study did find that big banks do receive a borrowing advantage based on the fact that they may be ?too big to fail.? But that advantage is not very large, and it?s a lot smaller than it was a few years ago. That suggests that Dodd-Frank, along with other bank reforms passed in the wake of the financial crisis meant to end too big to fail, are working, mostly.

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