Chalk another one up to the law of unintended consequences.
Last fall, the media promoted the $700-billion TARP bailout. During the weeks and months leading up to that bailout, they were also on board with cracking down on oil speculators for driving up the price of oil. But now it seems the TARP program is contributing to oil speculation.
On Aug. 3, Richard Bernstein, CEO of Richard Bernstein Capital Management and CNBC contributor, told "Squawk Box" viewers: "One has to wonder how much TARP money has gone into bank balance sheets to speculate on commodities, right? Because the amount that's - the amount of speculation in commodities on bank balance sheets is much larger than what you get from the CFTC."
Commodity markets are regulated by the U.S. Commodity Futures Trading Commission (CFTC) and the regulatory agency has been making efforts to crack down on oil speculation. However, Bernstein explained that much of the speculation is going on in over-the-counter markets beyond the reach of the CFTC.
"The CFTC is one thing, but unless you're going to - the OTC markets are much, much bigger," Bernstein said.
According to CNBC's senior economics writer Steve Liesman, banks are more willing to lend money to speculators, including the large amounts of TARP money on their balance sheets, because they are asset-backed loans.
"I've heard that directly, Richard, that one of the things the banks are doing is lending to the speculators to speculate in the oil market because it's an asset-based loan that they get," Liesman said. "It's secured."
Bernstein explained commodity swaps put pressure on the price of the oil and pointed to tangible evidence that showed there was speculation going on in the oil markets.
"If you just think about the swaps market, when I was at Merrill, we did some work - we did, for the Bank of International Settlements gets you data on commodity-related swaps," Bernstein said. "And there was a point in '08 or early '09, I don't remember exactly when, when the total value of swaps on bank balance sheets was two-and-a-half times the sales of all the material and energy companies in the world. So, how could one argue there's no speculation if you're hedging two-and-a-half times your sales? By definition you're speculating."