Just how big is the benefit that too-big-to-fail banks receive from their implicit taxpayer backing? Federal Reserve Chairman Ben Bernanke debated just that question with Massachusetts senator Elizabeth Warren during a recent hearing of the Senate Banking Committee. Warren cited a Bloomberg study based on estimates from the International Monetary Fund that found the subsidy, in the form of lower borrowing costs, amounts to some $83 billion a year.

Bernanke, who has argued Dodd-Frank financial reforms have made it easier for regulators to shut down troubled institutions, questioned the study’s validity.

“That’s one study Senator, you don’t know if that’s an accurate number.”

Here’s more of the rather heated exchange:

Bernanke: “The subsidy is coming because of market expectations that the government would bail out these firms if they failed. Those expectations are incorrect. We have an orderly liquidation authority. Even in a crisis, we, in the cases of AIG for example, we wiped out the shareholders…” Warren: “Excuse me, though, Mr. Chairman, you did not wipe out the shareholders of the largest financial institutions, did you, the big banks? Bernanke: “Because we didn’t have the tools, now we could. Now we have the tools.” Warren: “Whatever you’re saying, Mr. Chairman, $83 billion says there really will be a bailout for the largest financial institutions if they fail.” Bernanke: “No, that’s the expectation of markets, but that doesn’t mean we have to do it.”

The debate is interesting, but it misses a key, overarching point. There are so many intangible perks to the implicit backing of the world’s biggest economy that the benefits of too big to fail are actually impossible to measure – and certainly greater than $83 billion. After all, most if not all major U.S. financial institutions would have failed had it not been for massive interventions by both the Fed and the Treasury to lower interest rates aggressively, rescue frozen credit markets and inject capital into crumbling banks. Wall Street nearly ceased to exist. From that perspective, it could be argued that all the profits these firms have earned since amount to too-big-to-fail gravy.

Another negative side-effect has been loss of confidence in the Fed itself, since the central bank has been seen as bending too easily to the whims of Wall Street without imposing any penalties on the very firms that brought the financial system to the brink. This has arguably damaged the effectiveness and credibility of monetary policy, since Fed stimulus has become erroneously conflated, in some quarters, with financial sector rescues.

Then there are the softer, more subtle distortions: regulatory agencies where a revolving door to the industry is the overwhelming norm (SEC Chair Mary Schapiro just joined GE’s board); powerful lobbies that yield disproportionate political influence; brain drain that depletes talent from other industries that do not pay commensurate salaries.

And what about the costs of the historic crisis of 2007-2009 itself? The financial experts at Better Markets, a pro-reform Washington think tank, estimate the grand total amounted to a staggering $12.8 trillion. They also say the meltdown’s aftershocks continue to have large economic repercussions reflected in both the weakness of the recovery and the worsened fiscal outlook.