3 Things That Could Move Financial Stocks Today

NEW YORK(TheStreet) ---

The Federal Reserve will rule on Capital One's(COF) proposed $9 billion acquisition of ING Direct(ING) on Monday.

Capital One, needless to say, has a lot riding on the acquisition, but the approval might have a broader impact on the sector, as it will more firmly define just what regulators deem as "too big to fail."

Eight U.S. banks- Bank of America(BAC), Citigroup(C), JPMorgan Chase(JPM), Wells Fargo(WFC), Goldman Sachs(GS), Morgan Stanley(MS), State Street(STT) and Bank of New York Mellon(BK) are currently designated as SIFIs- systemically important financial institutions.

These banks attract higher capital requirements and more regulatory scrutiny. Large regional banks such as U.S. Bancorp(USB), PNC Financial(PNC) and Capital One were absent from the initial list.

But the National Community Reinvestment Coalition is among those objecting to Capital One's merger with ING arguing that the combined entity, which would be the fifth largest institution in the U.S., will be another too big-to-fail institution.

If the Fed were to reject the deal , it could mean that the "systemically important financial institution" designation of the 2010 Dodd Frank Act may extend to a new range of large but not titanic sized U.S. lenders, putting industry consolidation in doubt. An approval of the deal could mean that banks with a focus on more traditional banking, as opposed to those with sizeable capital markets operations, might have an easier time pulling off sizeable deals without earning a high-risk tag from regulators.

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The comment period for the controversial Volcker rule, which seeks to ban firms from making risky bets with their own capital, ends on Monday, Feb. 13. The rule, named after former Federal Reserve Chairman Paul Volcker, is expected to be implemented in July this year. But critics have said the rule is highly complex and argue that strict adherence to the provisions will increase the cost of compliance, raise the costs to the end user and reduce overall market liquidity.

The U.K, Japan and other countries have also expressed concerns that a restriction on trading sovereign bonds other than U.S. will hurt foreign sovereign markets.

Paul Volcker himself might submit a comment letter defending his rule on Monday, the Wall Street Journal reported. He is expected to argue that the ban on prop trading would make the financial system safer and ensure that firms are working in their clients interests.