You'll never guess what some banks are using the TARP money for

TARP money for bank acquisitions?

Banks seem to be allocating the money for four purposes: increased lending, absorbing losses, bolstering capital, and opportunistic acquisitions, said Mark Fitzgibbons, research director at Sandler, O'Neill & Partners, The Times reported.

TARP money for opportunistic acquisitions? Economist David H. Wang said using taxpayer TARP money for strategic buys may not be as vulgar as it sounds.

"It depends on the nature of the transaction. If the acquisition leads to a stronger bank that's better-equipped to be a lending force in the community or city, in the long run the acquisition will increase liquidity and lending," Wang said. "So people should not jump to conclusions, nor assume all bank acquisitions represent an abuse of TARP dollars. We'll need at least six months of data points on TARP bank operations before we can make a documented assessment of TARP."

Bank Sector Analysis: Indeed, the restoration of credit markets is part sprint, part marathon. The U.S. Federal Reserve's interventions are running the sprint, as they're greasing the wheels of commerce. The TARP represents the marathon: if these funds work as intended, they'll strengthen bank balance sheets -- i.e. put them on a sound financial footing to make loans as demand picks up, and certain bank acquisitions can assist that process. And, hopefully, that private-sector demand will increase in the quarter or two ahead.