The market rallied yesterday when the White House said it supported the private banking system. According to Reuters, an official said "This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring they are regulated sufficiently by this government."

The statement caused a small rally in big bank stocks, which had been off over 20% much of the day. But, they did not rally back to where the traded at the middle of the week.

Why? Smart investors know that the statement did not mean much. If one of the large banks, probably Citigroup (NYSE: C) or Bank of America (NYSE: BAC) gets into real trouble, the government will still have to step in. If confidence in one of the banks erodes fast enough and other banks refuse to do business with it or customers begin to pull enough money out, the government will have to step in. If Citi's stock price drops below $1 and is still falling, the government will have to step in.

Bank of America Corp. (NYSE: BAC) completed its acquisition of the parent of Chicago's LaSalle Bank in the beginning of October, a move that significantly increased Bank of America's presence in Illinois, Indiana, and Michigan. LaSalle had 400 banking centers, 17,000 commercial customers, and 1.4 million retail customers.

Now, most of LaSalle Bank's former senior leadership has defected to Chicago-based PrivateBancorp Inc. (NASDAQ: PVTB). Bank of America said that it would defend its customer base from PrivateBancorp or any lender that tries to poach customers from the biggest business lender in Chicago. They plan to start with visits to LaSalle customers: "We will be blanketing the market with calls starting today," said a Bank of America spokesperson.

Experts have drawn distinctions between LaSalle's commercial banking model and Bank of America's retail model. LaSalle allowed front-line lenders to make more credit decisions and handle virtually all of the clients' needs, but Bank of America says that credit decisions in most cases will still be made locally.

Meanwhile, former LaSalle Bank CEO, Larry Richman, will take over as CEO of PrivateBancorp on Monday. "Larry is a proven business and civic leader whose passion for clients and the Chicago area has been demonstrated in his past successes," said Richman's predecessor, PrivateBancorp's cofounder, Ralph Mandell. In turn, Richman said, "There is an extraordinary opportunity for us to build and expand client relationships to become the premier middle market commercial and private bank not only in Chicago, but also in all of the markets we serve."