Regional Bank ETFs Could Approve of Bailout Deal

One exchange traded fund (ETF) sector is showing signs that it might from the bailout already: regional banks.

Shares for a number of the banks rose about 4% midday, the Associated Press reports. However, the it wasn’t enough to boost the sector’s ETFs today.

The government’s bailout package aims to give financial institutions transparency into the full extend of bad credit banks are holding.

That would, in turn, give lenders confidence to do business with the sector and thus unthaw the frozen credit markets.

The regional banking sector hasn’t been as hard-hit by the financial crisis until earlier this week. Some experts say that these banks could need a merger partner in order to survive the meltdown of our system. Many of these banks are so small, they don’t pose a true threat to our economy. If trouble were to strike, the Federal Deposit Insurance Corp. (FDIC) could seize and sell them off.

• KBW Regional Banking (KRE), down 4.7% year-to-date
• iShares Dow Jones U.S. Regional Banks (IAT), down 10.2% year-to-date