TARP Deadline Could Cue Bank M&A

"They'll say they didn't apply, and technically they'll be telling the truth, but you and I will know it's that their regulator told them they didn't have a chance," Brown says.

That could be a big surprise to investors, who seem to be reacting positively on news a struggling bank is applying. Colonial Bancgroup (CNB Quote), for example, saw its stock shoot up from $1.41 to $1.83 per share Thursday morning after it said it was applying for government funds. That was before a broad market rally took over in the afternoon, lifting the bank's shares to $2.52 at Thursday's close.