JPMorgan Chase ( JPM) bought failed Washington Mutual in September from the Federal Deposit Insurance Corp. for $1.9 billion, just six months after it purchased Bear Stearns in a government-assisted deal. Bank of America ( BAC) is struggling to digest Merrill Lynch and also bought Countrywide Financial last summer.

Wells Fargo ( WFC) trumped Citigroup's ( C) already agreed-upon deal for Wachovia, ultimately winning a legal battle for the rights to the Charlotte, N.C. company.

Acquisitions also have made regionals like PNC Financial Services ( PNC) unlikely to be a buyer, as it digests its deal for National City and works to rebuild its capital levels.

PNC completed the Nat City deal last year, paying close to $6 billion for the bank as it received a $7.6 billion preferred equity investment from the government through the Troubled Asset Relief Program. PNC did not have a loss-sharing agreement with the government, despite Nat City's troubled balance sheet. On the other hand, US Bancorp bought Downey Savings and Loan and PFF Bank & Trust late last year with help from the government.

Other banks are also reluctant to take on significant deals these days, regardless of their credit standpoint, because they don't want their current capital levels to take even further hits.

Still, the cheap prices that healthy banks could acquire franchises at these days is almost too good to pass up.

"Every bank has that wish list," says Oppenheimer analyst Terry McEvoy, adding the companies would have had to pay a premium to acquire its targets before the credit crunch. These days, banks are more apt to take only the attractive deposits and branches of those firms and leave the assets that pose a credit risk for the government to deal with, he says.

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