TARP Deadline Could Cue Bank M&A

Sixty financial institutions, including giant multinationals like American International Group (AIG), JPMorgan Chase (JPM), Goldman Sachs (GS) and a host of smaller companies have received equity investments from the government so far under TARP.

Some banks, like Wells Fargo (WFC), were essentially forced to take the government's money, because regulators insisted they do so to remove any potential stigma for other banks. Others, such as San Antonio-based Cullen/Frost Bankers (CFR) can make a legitimate case that they are well-capitalized and don't want to subject themselves to the restrictions that go along with an investment from Uncle Sam. The bank has said it will not seek TARP funds.

Several have said they will apply, but so far have not announced that they have been approved.

Still others, such as Anchor Bancorp Wisconsin (ABCW), have been silent on the issue. Anchor could sure use the money. According to its third quarter filing Monday, Anchor owes US Bancorp (USB) $56 million either by the end of the year or as soon as it can raise the money, whichever comes first.

Mark Timmerman, the bank's general counsel, says the bank's attorneys have advised him not to make any public statements because it is in a quiet period due to a shelf registration filing. Spokespeople for U.S. Bancorp did not return a call or an email message.

Brown thinks regulators will tell banks likely to be rejected not to apply in advance, allowing them to save face by claiming that they didn't apply. That is why Brown expects several banks to say next week that they had a change of heart and decided not to apply after all.