These banks’ credit is rated higher than they would be in a free market, meaning they profit from the expectation of a bailout, if necessary. 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.
The Circle of Bank Profit:
1) create nothing of value
2) create instability and inefficiency, weaken the economy
3) because of weak economy, ask for federal assistance (bailouts, deregulation)