That's what Washington Examiner columnist Tim Carney (author of Obamanomics: How Barack Obama is Bankrupting You and Enriching His Wall Street Friends, Corporate Lobbyists and Union Bosses) writes. He gives three examples from the last week to demonstrate "how the bailed-out subsidy sucklers of Wall Street continue to profit, not from the free exchange and risk-taking that embodies the market, but from cronyism and offloading their risk onto the taxpayer."
- Bank of America, which would have collapsed without the taxpayer bailout, moved $55 trillion (with a t!) in derivatives to a subsidiary backstopped by the FDIC. That means taxpayers will be on the hook if risky derivatives blow up.
- Lenders and realtors lobbied successfully for a measure to expand taxpayer insurance for mortgages on homes worth nearly $1,000,000! A $100,000 home is one thing. But it's ridiculous that taxpayers would be on the hook while banks still get paid.
- A Government Accountability Office report highlighted the numerous conflicts of interest at the Federal Reserve during the 2008 bank bailouts. For example, New York Fed official Stephan Friedman was on the board of Goldman Sachs and actively buying Goldman shares while the Fed moved to give it special access to lending windows. And JP Morgan CEO Jamie Dimon sat on the same NY Fed board while the Fed was giving billions in bailouts to JP Morgan.
His column also adds information about the revolving door between government institutions benefiting big banks and the big banks themselves. Finally, he notes how the bailouts create false market information. He concludes:
So banks profit largely through activities that do not create value or efficiencies. They profit through financial games that rest on government favors. Many Occupy Wall Street protestors demonize all profit. Conservatives defend profit-seeking as the engine that creates prosperity for all of society.
But the big banks have rigged the game so that they profit without creating value. In fact, they profit from activities that weaken the economy by creating instability.
Today, big banks give capitalism a bad name. Believers in the free market should stop giving banks cover.
Carney reports that some conservatives are responding by saying "don't blame corporations, blame the government and its rules." Would we say the same about how ACORN or unions exploit government rules?