Tough Rescue Plan, Good For America

Investors are cautiously optimistic that the banking bill coming out Monday will be just the boost this stock market needs.

Optimism stems in part from that piece of the plan announced a few days back which limits executive compensation.

On the news financial firms including Goldman Sachs and Morgan Stanley said they would re-pay their TARP money by the end of the year.

Investors including Fast Money Trader Guy Adami, a former Goldman Guy thought the development was very positive. “It leads me to believe they want to pay their people, which makes me think they anticipate a good year.”

And Karen Finerman noted that tougher rules – such as compensation limits -- could weed out the worst from the rest. She reasons that although TARP is cheap money, more onerous rules make it unattractive, unless you really need the funds.

Jon Najarian is also an advocate of this tough love bank bailout. He puts forth an intersting analogy.

“Think of the financial crisis as a forest fire,” he says. “It’s burned down the forest and now there are only a few trees standing."

That might sound corny, but in the long run a fire is actually good for the forest. “All the trees that burned down create fertilizer for the next group of trees.”

Confused? It's a bit of a metaphor. Najarian thinks the limits on compensation will push smart talent out the door -- and they will start their own financial services firms. It will take a while, but eventually we’ll have hundreds of banks out there and we’ll ultimately get the next Merrill Lynch or Goldman Sachs.

Is there a trade here?

No trade on the fire and forest thing -- but in the short term Jon Najarian says the options action looks bullish for the bank sector. He tells the panel that action in Goldman suggests this stock could go higher. And he say keep an eye on Fifth Third , Regent Bank and Huntington Bank Corp .

If you’re looking for an international banking play, I’d look at Banco Bradesco, Banco Itau , and ICICI Bank, adds Tim Seymour.

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Trader disclosure: On Feb. 6th, 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); Najarian Owns (CAT) Call Spread; Najarian Owns (EEM) Call Spread; Najarian Owns (FCX) & (FCX) Calls; Najarian Owns (GS) Calls; Najarian Owns (MWW) Calls; Najarian Owns (GDX) Call Spread;Najarian Owns (MSFT) & (MSFT) Short Calls; Najarian Owns (MS) & (MS) Short Calls; Najarian Owns (MOS) Call Spread; Karabell Owns (BHP), (CSCO), (FCX), (GE), (JPM), (NVDA), (NOK); Seymour Owns (BAC), (EEM), (FXI), (TM); Seymour's Firm Owns (TKC)

J. Najarian Owns (GS) Call Spreads