Smaller Regional Banks:

With the regulatory crack-down targeting "too big to fail" banks, it's not hard to guess which other firms will benefit: Small, sturdy regionals.

Already, the Federal Deposit Insurance Corp. has structured dozens of assisted deals for smaller banks across the country that have healthy balance sheets and room to grow. The FDIC has about $40 billion in assets up for grabs from failed banks. The agency has seized 225 institutions since the start of the crisis, 50 this year alone. Hundreds more are predicted to go under before it ends.

Most sales occur at the time of failure, with the FDIC structuring loss-share agreements on books of bad loans in order to quickly sell deposits and other assets to stable, willing buyers. The situation has presented attractive deals for banks like First Niagara ( FNFG), Hudson City ( HCBK) (whose CEO Ron Hermance is pictured above), Valley National ( VLY) and others -- the type of small, conservative S&Ls that FDIC Chairwoman Sheila Bair has voiced strong support for.

As those deals transpire, big banks are facing regulatory and economic pressures to whittle down. If the Obama administration's Volcker rule proposal succeeds, it will force large, diverse firms like Bank of America ( BAC), JPMorgan, Citigroup ( C) and Wells Fargo ( WFC) to chop off either their investment banking or traditional banking divisions. Otherwise, they may be required to pay into a resolution fund that would handle too-big-to-fail firms in case

Other measures on derivatives trading, leverage, capital, liquidity and consumer protection will generally make their operations more costly and less profitable.

But the new restrictions won't have as much of an impact on smaller banks that make money -- albeit less money -- by simply taking in deposits, making loans and providing basic financial services. In fact, it will level the playing field and provide handsome opportunities for growth. This analysis by Ratings highlights Hudson City as a top pick among U.S. bank and thrift holding companies with total assets between $10 billion and $100 billion.

-- Written by Lauren Tara LaCapra in New York.

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