The Bank of New York Mellon Corp. (NYSE: BK) has become a minority equity investor in International Derivatives Clearing Group (IDCG), the derivatives clearing unit that's a subsidiary of Nasdaq OMX Group (NASDAQ: NDAQ). Financial terms of the deal were not disclosed, nor was the size of the stake -- but it's definitely a symbiotic pact. IDCG will use securities servicing products provided by the bank, and Bank of New York Mellon's chief executive of broker-dealer services, Art Certosimo, will join IDCG's board.

"This strategic partnership with Nasdaq OMX provides our buy side and sell side clients with a flexible platform that meets their derivatives trading, clearing and servicing needs," stated Bank of New York Mellon President Gerald Hassell. Bob Greifeld, CEO of Nasdaq OMX, added that the partnership "lends support to President Obama's proposed reforms of the [over-the-counter] derivatives market."

Analyst upgrades:

• Keefe Bruyette upgraded Bank of America (NYSE:BAC) to Outperform from Market Perform due to valuation and the company's better balance sheet following capital raises. The firm raised its target on shares to $16.50.
  
• Merriman upgraded Blue Coat Systems (NASDAQ:BCSI) to Buy from Neutral to reflect stabilizing demand and merger synergies from the Packeteer acquisition.
  
• Thomas Weisel upgraded Genomic Health (NASDAQ:GHDX) to Overweight from Market Weight based on valuation, a new colon cancer assay expected in 2010, and upside from new sales hires.
• Plexus (NASDAQ:PLXS) was upgraded to Outperform from Neutral at Baird.
  
• Great Plains Energy (NYSE:GXP) was raised to Buy from Neutral at Goldman.
  
• Ericsson (nASDAQ:ERIC) was upgraded at Societe Generale to Buy from Hold.

TheStreet.com's Jim Cramer says this deal is hugely important -- today is the last stand for the bears.

Today is make or break for the short-sellers, the SKFers, the bears on banks. I cannot stress how important the Bank of America (NYSE: BAC) (Cramer's Take) deal is. The syndicate desk placed this stock with great hands, restricting flippers to one-fifth of their orders and giving mutual funds only about a quarter of what they wanted. Plus, given the stealth selling that BAC did ahead of this, the company seems done for now -- maybe forever -- although it can't give back TARP funds. However, it should be able to do bond financing that will put it in a good position to do so. And with the velocity of sales picking up at the same time as the new housing starts go down -- stunning figures there -- it is possible that we could see a reversal of some of Bank of America's soured loans while we see what happens with a big lender begins to get a major share of what can be a lucrative mortgage market. We might look back at BAC at $10 and say, "That was our last good chance to buy it," as there are many, many analysts set to reiterate their buys this morning.

Late Monday, The Bank of New York Mellon Corporation (NYSE: BK) unveiled its plan to sell $1.2 billion worth of stock in order to repay its TARP loan to the U.S. Treasury Department. The company priced 42 million shares at $28.75 a piece, a discount of 3% to the stock's close on Monday.

Even though BK passed the government's stress test with no trouble, the bank is nonetheless eager to raise funds and pay off its debt to the government. Other financial firms selling stock to repay TARP loans include Capital One Financial (NYSE: COF) and U.S. Bancorp (NYSE: USB).

However, investors seem none too pleased with BK's dilutive stock offering. The security shed 2.5% within the first 10 minutes of today's trading, extending BK's retreat from double-top resistance at the $33 level. The shares first shied away from this region in mid-April, and pulled back from the $33 neighborhood again last week.

TheStreet.com's Jim Cramer says we should closely monitor the situation as more banks raise capital with equity.

What really did happen Friday? I keep thinking about this because, surely, if you saw how well the Wells Fargo (NYSE: WFC) (Cramer's Take) and Morgan Stanley (NYSE: MS) (Cramer's Take) deals behaved, didn't you, as a bank player, have to presume that there would be and will be more offerings?

If Wells Fargo went up 6, isn't it reasonable to presume that Bank of New York Mellon (NYSE: BK) (Cramer's Take), KeyCorp (NYSE: KEY) (Cramer's Take), Capital One (NYSE: COF) (Cramer's Take), BB&T (NYSE: BBT) (Cramer's Take) and no doubt all of the others, would do the same? Who wouldn't take advantage of this? Fifth Third (NASDAQ: FITB) (Cramer's Take)? Suntrust (NYSE: STI) (Cramer's Take)?

Why did they rally so much?

U.S. stock futures once again climbed Thursday morning, pointing to Wall Street continuing Wednesday's strong rally ahead of the stress test results. Investors were encouraged by Treasury Secretary Tim Geithner, who said no banks are at risk of insolvency. Meanwhile, General Motors (NYSE: GM) results just rolled in with another big loss; investors will also focus on chain store sales.

While results of the tests will only be released this afternoon, more was leaked and for now it seems that Goldman Sachs (NYSE: GS), American Express Co. (NYSE: AXP), JPMorgan Chase (NYSE: JPM) and Bank of New York Mellon Corp. (NYSE: BK) will not be asked to raise more capital. Citigroup Inc. (NYSE: C) will need to raise about $5 billion, Bank of America Corp. (NYSE: BAC) about $10 billion and Wells Fargo & Co. (NYSE: WFC) will also be asked to raise capital. They will have one month to come up with a plan to raise the additional resources, federal regulators said Wednesday.

TheStreet.com's Jim Cramer says we have more than enough good banks to lead us yet higher.

The issue isn't that there are six "bad" banks, it's there are 13 "good" banks. All we need is a plurality of good banks to merge the bad banks into. Anything that creates bigger, more streamlined banks is a win.

Giving PNC (NYSE: PNC) (Cramer's Take) or Bank of New York (NYSE: BK) (Cramer's Take) or JPMorgan (NYSE: JPM) (Cramer's Take) or U.S. Bancorp (NYSE: USB) (Cramer's Take) some bad banks with some guarantees is terrific. Yes, it is true that Bank of America (NYSE: BAC) (Cramer's Take) and Citigroup (NYSE: C) (Cramer's Take) and Wells Fargo (NYSE: WFC) (Cramer's Take) may need capital. But think of it like this: If you think the banking environment is actually going to get better, you might be willing to buy some sort of convertible bond from these companies that lets you capture equity upside.

TheStreet.com's Jim Cramer says builders have stopped, and prices have fallen to affordable levels.

Housing bottoms form when homebuilders finally stop building. They come when permits dry up. They come when foreclosures are so rife that they drive down the prices to affordable levels. Housing bottoms come when the homebuilders give up and merge. They come when mortgage rates go really low. They come when unemployment claims level out.

The bottom, well, is now. We are seeing a huge wave of buying of foreclosed homes in Northern and Southern California and in Florida. The numbers are too positive to think that these, the hardest-hit areas, aren't putting in long-term bottoms. Of course, where legacy housing is coming on, most notably in Florida and Las Vegas, where lenders like Corus Bank (NASDAQ: CORS) (Cramer's Take) abetted ridiculous levels of condominium construction, or New York, where the economy was on fire courtesy the brokers and the lawyers and the foreign tourists taking advantage of a cheap dollar, you are not going to get a bottom for a year. In New York's case, the building continued right through the layoffs because of tax advantages that ran out inopportunely right at the top. It will most likely be a tough market for a while.

One sure way to not impress your friends at a dinner party is to start talking about the banking sector.

Well, all banks are not the same, and there has been one bank that's managed to avoid the devastation that Wall Street has inflicted on itself, the nation, and the world, and of course it's the bank that was founded by Alexander Hamilton: The Bank of New York Mellon (NYSE: BK).

TheStreet.com's Jim Cramer says we need some order -- we need some banks to survive.

Is there a writer out there who thinks more liberal mark-to-market isn't the greatest sin the regulators could ever pull off? Is there one? Today I see stories about how perfuming balance sheets is a terrible idea and reckless. I see stories about how liberal mark-to-market will confound the Treasury's public/private partnership. I see stories about how crummy bankers and corrupt pols browbeat the Financial Accounting Standards Board into giving away the store.

TheStreet.com's Jim Cramer says that fundamentally, we have the same decent setup here.

Where are the sellers? How did they vanish? Were they really reacting to the hazards of a CEO being fired by the government?

I have to laugh about that analysis; as yesterday's outrage on flagship said, the government did us all a favor by getting rid of GM (NYSE: GM) (Cramer's Take) head Rick Wagoner -- perhaps the least competent CEO of a major American company -- and given the choices out there, that's a vicious benchmark.

TheStreet.com's Jim Cramer says if we let some banks give it back, others may rush to do so unnecessarily.

Breather day? Or does this monster ever breathe?

We are seeing stress levels coming down: the magic VIX going under 40?, money coming in, industrials bouncing -- I watch International Paper (NYSE: IP) (Cramer's Take), Du Pont (NYSE: DD) (Cramer's Take), Packaging Corp. (NYSE: PKG) (Cramer's Take) and Ingersoll Rand (NYSE: IR) (Cramer's Take) for true industrial bounces. We are seeing the rails and the fertilizers -- two 2008 sectors -- regaining life and lifetime moves in a session.

But it was and is and always will be about the banks, and no matter what we do it will come back to them. They are the reason we got in trouble, and they are the reason we got out of trouble.

It is being reported today in the Business Journal that the safest bank in the United States is Wells Fargo & Company (NYSE: WFC).

According to Global Finance, which will publish its analysis, "World's 50 Safest Banks" in its April issue, international banks dominate the rankings, which show the effects of the sub-prime mortgage meltdown and credit crisis brought on by large Wall Street players. San Francisco-based Wells Fargo is the top-rated U.S. bank at No. 21. European banks now dominate the rankings, with only four U.S. banks among the listing.

Apparently the markets think that U.S. risk of sovereign default is steadily creeping up. Hedge fund blogger Zero Hedge puts up the numbers here. According to the numbers from finance calculator company Markit, U.S. is a greater default risk than Japan or Germany, among others.

A default would destroy the U.S. economy and TARP recipients, in particular. The Piqqem Sentiment on major TARP holders is more or less neutral, although the bankruptcy of the U.S. Treasury might change that, no?

Options players, start placing your bailout bets: Nasdaq OMX Group (NASDAQ: NDAQ) announced today that it will launch options trading on its Government Relief Index (NASDAQ: QGRI) effective Monday. The 3-week old Government Relief Index was constructed to track the performance of companies that have received at least $1 billion in government funds under the Troubled Asset Relief Program (TARP) or similar bailout endeavors.

Since its launch on January 5, the QGRI has blazed a steady path lower, tumbling 36.8%. "When you have volatility and a direction, you start to see there's an opportunity to put a product on it that allows investors to benefit from the movement," said John Jacobs, Nasdaq's executive vice president, in comments to Reuters. (Is it just me, or is Mr. Jacobs subtly recommending put options on the Bailout Bunch?)

If you do decide to take a speculative gamble on the slipping Government Relief Index, you'll be wagering on such high-profile bailout names as Citigroup (NYSE: C), General Motors (NYSE: GM), Bank of New York Mellon (NYSE: BK), and Goldman Sachs Group (NYSE: GS). Overall, it looks like the QGRI might be traders' best opportunity to turn a profit on their steadily depreciating taxpayer investments. How's that for cold comfort?

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.