I haven’t seen anyone try to estimate the implicit subsidy taxpayers provide megabanks because of Too Big to Fail policies. So it’s nice to see Gretchen Morgenson column yesterday in the Times reporting on Dean Baker’s stab at it.

First, applaud Morgenson for trying to put the TBTF issue front and center with this common-sense lede:

AMID all the talk about systemic risk regulators, consumer protection and other fixes to our fractured financial system, there is a troubling silence on what may be the single most important reform: how to rid ourselves of banks that are so big and interconnected that their very existence threatens the world.

So how to go about quantifying this subsidy? We already know the hundreds of billions of dollars the government has laid out to save civilization from the collapses of AIG, Citigroup, Bank of America, Bear Stearns, et al.

But what about what the ongoing costs? Baker runs some the numbers comparing the cost of borrowing for the eighteen biggest banks versus the remaining smaller ones. Morgenson:

From the beginning of 2000 through the fourth quarter of 2007, the cost of funds for small institutions averaged 0.29 percentage point more than that of banks with $100 billion or more in assets. But from late 2008 through June 2009, when bailouts for large institutions became expected, this spread widened to an average of 0.78 percentage point.

Using those numbers, Baker estimates a minimum annual subsidy of $6.3 billion, though probably much higher (up to $34.1 billion according to this test, but as Baker and Morgenson point out, that number is unlikely, as it doesn’t take into account factors beyond government safety nets—like brand names or perceived professionalism—that might make investors more willing to lend to giant banks than small ones). That’s how much less they’re paying—at least according to this thought experiment—because of investors’ belief that the government will always bail them out because the consequences of failure would be too high.

As Morgenson helpfully points out, the lowball $6.3 billion is still “roughly what the government spent in 2008 on the Global Health and Child Survival program, an initiative aimed at preventing malaria, AIDS and tuberculosis” or 9 percent of big banks’ total profits.

This is sort of back-of-the-napkin stuff, but well worth doing.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.