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6 Ways the Big Banks Are Getting Back-Door Bailouts and Making Big Money From Taxpayers

The country's biggest banks are happy to make their money from the same governments about which they love to whine.

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4. Cashing in on Tax Returns

It's not only your unemployment, financial aid, or SNAP benefits that the big banks control these days—they also might come between you and your tax return.

Once again, South Carolina takes the lead, claiming to save the taxpayer money by cutting a deal with Bank of America, this time to send out tax returns in the form of—you guessed it—prepaid debit cards from Bank of America. And just like with unemployment benefits and financial aid (or your regular, consumer bank card), the bank is making its money collecting fees from people trying to access their own money.

“They’re not even nickel and diming people, they’re five-dollaring and 10-dollaring people,” Sue Berkowitz, Director of the Appleseed Legal Justice Center, says.

Oh, and the bank got this deal through a no-bid contract—the Department of Revenue calls them “the best fit” for the program. The program isn't mandatory but, the Palmetto Public Record notes, it's opt-out, not opt-in. Which means that unless you request otherwise, your money will be given to you through Bank of America—which in addition to sticking you with ATM fees and other charges, is going to make interest on your money while it's sitting in their account.

5. Refinancing Homes Means Big Bucks for Banks

Getting the big banks to refinance mortgages and help people facing foreclosure stay in their homes has been a huge fight, with activists around the country putting their bodies on the line, physically occupying homes to keep residents in them.

Now the program that's supposed to help those struggling homeowners looks instead to be a big fat handout to the same banks that were preying on borrowers to begin with. According to the Wall Street Journal, banks that service mortgages could make as much as $12 billion by refinancing under the newest version of the Home Affordable Refinance Program (HARP 2.0). And the borrowers? Oh, they'll save money, too—somewhere around $2.5 billion, maybe $5 billion tops.

The program is supposed to let underwater borrowers who've made all their payments in good faith refinance their mortgages at current market value. But, Bonnie Kavoussi at the Huffington Post notes, instead those banks are able to charge steep fees and above-market interest rates.

Shaun Donovan, the current Secretary of Housing and Urban Development calls it “a monopoly on refinancing,” saying at a Senate hearing, "Whoever holds their current loan, whoever is the servicer, they can charge [borrowers]—and we're seeing this—very high fees."

6. Profiting Off The Very Idea of Another Big Bailout

In case all this profit enabled by the government wasn't enough for you, perhaps the most disturbing recent bank-related news is a report by the “ wild socialists” at Bloomberg that, “JPMorgan receives a government subsidy worth about $14 billion a year, according to research published by the International Monetary Fund and our own analysis of bank balance sheets.”

They explain:

In recent decades, governments and central banks around the world have developed a consistent pattern of behavior when trouble strikes banks that are large or interconnected enough to threaten the broader economy: They step in to ensure that all the bank’s creditors, not just depositors, are paid in full. Although typically necessary to prevent permanent economic damage, such bailouts encourage a reckless confidence among creditors. They assume the government will always make them whole, so they become willing to lend at lower rates, particularly to systemically important banks.

In other words, because we bailed them out once, the expectation that we'll do it again is actually making the banks money. Other lenders are willing to lend money to the “systemically important banks” (read: banks that got bailed out by the US government because they were “too big to fail”) at lower interest rates because they presume that they'll always get their money back since the government will make sure the banks don't go belly up. So the biggest banks are paying less in interest than medium-size and small banks--and that adds up to billions. 

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