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Caving in to the American Banker's Association, the FDIC has stipulated that the amount of loan debt it provides Ally Bank will be dependent on the deposit rates it offers. We've already seen Ally Bank lower its rates once after the ABA letter and I suspect we'll see more reductions in the future.

The American Banker's Association sent a ltter to the FDIC's Sheila Bair on May 27th, requesting the agency take action to force Ally Bank to lower its rates. They claim Ally Bank is acting irresponsibly by offering above market rates. I don't see the ABA sending letters to agencies when banks raise the rates on their credit cards to usurious levels.

In a time of fluctuating interest rates, this EverBank account pledges that it will always remain in the top 5% of all competitive accounts.

The FDIC's insurance may lose 17% of its capital as bank failures have drained it. It's expected to to the point where the FDIC may ask other banks to pay more to replenish the fund.

There's another bank acquisition to report. PNC Corp. with the assistance of the TARP program, has purchased Ohio based National City. The combined bank will have a core deposit base of $180 billion, making PNC the fifth largest U.S. bank by deposits.

Alpha Bank and Trust was closed last Friday by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. This is the ninth bank failure in 2008.

In a surprise move, Wachovia scrapped its deal with Citi and agreed to be acquired by Wells Fargo. Wells not only agreed to buy the whole bank, but raised its offer price and did the deal without any government assistance.

The battle between Wells Fargo and Citi for Wachovia is over and Wells is the winner. Citi walked away citing concerns over Wachovia's loan portfolio. Wells gets to greatly expand its banking franchise but also inherits billions in bad loans.

When I was in college, Morgan Stanley was the place all of the soon-to-be Ibankers wanted to be. It was the blue chip, along with Goldman, of the NY Investment banking world. A company that once controlled markets is now at the market's mercy.

Sovereign Bank was quietly purchased by Banco Santander after a run caused it to face collapse. More of this is coming even with the government bailout.

Citigroup's stock fell below $10 in trading today, hitting a level not seen since the mid-90s. There are also rumors Citi may be purchasing Chevy Chase bank. Looking at their stock chart I'm not sure they should be buying anyone.

Citigroup received the government bailout today that everyone knew was coming. The question is will this be enough and will Citi be back on the hot seat in a couple of months?

So here's an interesting question: how are bank profits increasing when the economy and many of the loans written by the banks are in worse shape then ever? Don't believe the numbers.