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Bank Takeover Boom Coming?

The urge to merge might be soon sweep across the nation’s small and mid-size banks.

“The Treasury Department hopes to spur a new round of mergers by steering some of the money in its $250 billion rescue package to banks that are willing to buy weaker rivals," according to the New York Times on CNBC.com.

“We have received indications of interest from a broad group of banks of all sizes,” Treasury Secretary Hank Paulson said at a news conference Tuesday. Although he didn’t name firms specifically, it’s widely believed that he was talking about regional banks.

And those that are likely to drive the initiative could include Fifth Third, BB&T , and SunTrust Banks – the so called super-regional banks. In other words, it's widely believed they will receive the benefits of a cash injection.

”(But) once the government gives the banks the money they have no say where it goes. They can use it for an acquisition, they can lend it out or they can sit on it," reminds CNBC's Steve Liesman. It's important for investors to know that as they "ask themselves if they should buy in front of the mergers.”

Some likely takeover candidates according to Liesman are National City Corp , KeyCorp , Comerica and First Horizon . But this isn’t a slam dunk in my opinion, Liesman concludes.

The Bottom Line: It’s a tough trade.




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Trader disclosure: On Oct. 21, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Adami Owns (AGU), (BTU), (C ), (GS), (INTC), (MSFT), (NUE); Macke Owns (UUP), (MCO), (MSFT), (SDS), (BNI); Finerman Owns (GS): Finerman’s Firm Owns (MSFT); Finerman’s Firm Owns (DNA) Call Spreads; Finerman’s Firm Owns (OIH) Puts; Finerman’s Firm Is Short (IYR), (IJR), (IWM), (MDY), (SPY), (COF), (BBT), (USO): Najarian Owns (EMC), (BNI): Najarian Owns (AAPL) And Is Short (AAPL) Calls; Najarian Owns (AXP) Put Spread; Najarian Owns (FCX) And Is Short (FCX) Calls; Najarian Owns (MS) And Is Short (MS) Calls; Najarian Owns (RF) And Is Short (RF) Calls; Najarian Owns (MSFT) And Is Short (MSFT) Puts; Najarian Owns (CAL) And Is Short (CAL) Calls; Najarian Owns (MGM) And Is Short (MGM) Calls; Najarian Owns (BNI) And Is Short (BNI) Calls

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