More handouts in store for big banks? (Why Not? Money Grows on Trees, Doesn't It?)

Jim Brown - OneNewsNow - 8/31/2009 4:00:00 AM A leading free-market economist says because of the bank bailouts authorized by the Bush and Obama administrations, any big bank that runs into trouble is both so large that it has to be dealt with and has the expectation that it will be bailed out by the federal government.

A chart recently published by The Washington Post details how America's largest banks have become even larger and more interconnected after being bailed out by the federal government.

The top ten banks in the country have now grouped into two very different categories. In the first category, J.P. Morgan Chase, Citibank, Wells Fargo, and Bank of America each individually hold roughly 10 percent of the overall banking assets in the U.S. The other six banks are decidedly smaller and less important.

David John, a senior research fellow at The Heritage Foundation, says the growth of those four big banks is dangerous because the government does not know what to do if one of them were to fail again.

"This means that if any one those four banks -- the four biggest banks -- runs into trouble, the United States is going to have basically no choice other than to bail them out because Congress still has not dealt with the question of how to deal with a too-big-to-fail bank," he contends.

Given the bailouts in the past year, John believes any large bank CEOs who find themselves in trouble will immediately go to Washington and "start holding out their hands."