Bloomberg delved deep and determined U.S. taxpayers are subsidizing the big banks to the tune of $83 billion a year.

What if we told you that, by our calculations, the largest U.S. banks aren’t really profitable at all? What if the billions of dollars they allegedly earn for their shareholders were almost entirely a gift from U.S. taxpayers?

How this happens is due to these banks being perceived as too big to fail, giving an implicit U.S. government guarantee to creditors. As a result, Too Big To Fail Banks can borrow at a much lower interest rate than other banks.

Small as it might sound, 0.8 percentage point makes a big difference. Multiplied by the total liabilities of the 10 largest U.S. banks by assets, it amounts to a taxpayer subsidy of $83 billion a year. To put the figure in perspective, it’s tantamount to the government giving the banks about 3 cents of every tax dollar collected.

The top five banks -- JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. - - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry -- with almost $9 trillion in assets, more than half the size of the U.S. economy -- would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.

Bloomberg created controversy of course by pointing out bank profits are our dollars so they wrote up a very detailed analysis to explain how they arrived at the $83 billion a year figure:

How did we get there? To recap, the largest banks can borrow money at a lower rate because creditors assume the government, on behalf of taxpayers, will rescue them in an emergency. In a 2012 study, two economists -- Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz -- estimated the value of that too-big-to-fail subsidy at about 0.8 percentage point. We multiplied that number by the top 10 U.S. banks' total liabilities to come up with $83 billion a year.

Some said that we shouldn't have used total liabilities in the calculation. A lot of those liabilities are customer deposits, the argument went. Since these are explicitly guaranteed by the Federal Deposit Insurance Corp., why would the subsidy apply to them?

Beyond the outrage banks are getting a glorified taxpayer subsidy when sequestration is about to happen, the real horror of this story is how creditors are banking on TBTF banks to be bailed out in the next financial crisis.

Senator Elizabeth Warren questioned Ben Bernanke on this glorified subsidy. While some will claim the exchange is confrontational, I don't think so, it's more they are in a discussion and it's clear Bernanke thinks the TBTF banks should not receive such a low borrowing advantage. Refreshing to see Warren on the Senate banking committee raising up real issues with the Fed.