Devoted to Managers and those that seek to improve their management skills

Those banks in the United States which didn't enter into the shark-filled waters of subprime loans, will be in a strong position this year to benefit from the problems facing the industry.

What we'll probably see in a linear way, will be the continued "rescuing" of financial institutions, like Bank of America (BAC) did recently with Countrywide Financial (CFC). As things stablize and a clearer picture of risk emerges, at that time we'll begin to see the acquistions and mergers come to the front; probably in the second half of 2008.

"There's a lot of sellers out there, and the burst of deals will occur once the credit picture is more stable," said Tom Michaud, president of the securities firm Keefe, Bruyette & Woods Inc. "You'll see more consolidation in the back end of the year, and it will be the ones that are weak and in need of a partner."

The banks to watch of course are those with limited or no exposure to mortgage-related problems. Those banks will be in position to make a move on their weakened competitors.

Once the buying or mergers begin, it'll probably escalate, as banks won't want to be left out of the unusual opportunities the situation offers them.

What's really holding everything back now is the uncertainty, like I mentioned, of how deep and wide the risk is at the institutions. A bargain isn't a bargain if it can bring the buyer down with it. That's the reason for the wait. There's also the litigation factor that must be taken into account by the potential suitors also.

One other factor that could cause problems are antitrust issues, but in the current economic climate, we'll probably see a wink and a nod from that direction, as the alternative won't be acceptable in the government's eyes.

For the Wall Street Banks, what's been helping them has been the sovereign funds of foreign governments, which have been investing in and propping up the huge institutions.

What will all this mean? For the most part, the banking sector should go through some short-term struggles, as the investments - even at bargain prices - still retain short-term risk which will cause them to underperform while loan problems are written down.

Over the long-term though, it could be a boon for banks if they handle things right. These problems are the opportunities that come along very rarely, and should make the quality banks even stronger over the long haul.