If you think that the 'too big to fail' / 'too interconnected to fail' doctrine probably protects the Bank of America and JP Morgan Chase, you think right. But don't expect either stock to race-up like Microsoft (NASDAQ: MSFT) did in the 'Wonderful 1990s' -- not just yet.

The U.S. Government's estimated $700 billion plan to stabilize credit markets will likely safeguard both BAC and JPM due to the large impact a failure of each would have on the financial system, Luigi Zingales, professor of finance at the University of Chicago, told Bloomberg News Monday, adding that it "will definitely make their bonds safer."

BAC, JPM: Operational challenges ahead

However, economist Richard Felson told BloggingStocks Monday investors should not rush out and buy either stock just yet. Felson added that he does not have a rating on nor own shares in either company. The Bank of America (NYSE: BAC), which closed Friday at $37.48, has a p/e of 21; JP Morgan Chase (NYSE: JPM), at $47.05, a p/e of 15.5.

"Each has a series of operational issues to address in the financial services space," Felson said. "The Bank of America has a major merger and culture integration process ahead following the purchase of Merrill Lynch. Major employee, client retention and investment decisions are ahead, and this will weigh on shares."

CNNMoney reports that Bank of America (NYSE: BAC) reports that its earnings fell 41% in the second quarter to 72 cents a share. In response, its stock is up 11% in pre-market. Why the celebration? Analysts expected Bank of America's earnings to tumble 48% to 53 cents, so it beat those expectations by 19 cents a share.

According to CNNMoney. Bank of America's revenue was up 14.6% to $20.32 billion during the quarter due to "wider net interest margins, loan growth and higher income from mortgage banking and the company's investment and brokerage services." Thomson Reuters surveyed analysts who expected revenue of $18.37 billion -- 10% lower than its actual results.

I am wondering whether some investors will think we have bottomed out of the banking crisis. I think it's too early to break out the champagne, but the coming rally could be a good time for nervous investors to bail out. That's because credit losses could keep rising -- Bank of America added $5.8 billion to reserves for bad loans and its Countrywide purchase could boost those reserves far more in coming quarters.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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."

If you're a regular reader, I'm sure you already know from earlier blogs that I'm a fan of smart investments in green stocks. JPMorgan Chase & Co. (NYSE: JPM) is not only the third-largest U.S. bank, it also has a $1 billion portfolio of wind energy investments. Its 26 wind farm investments, included in the portfolio, have enough juice to power an average of 600,000 U.S. homes.

I feel that wind power is a terrific investment if done in an intelligent way, but this is not the only way that JPM impresses me. JP Morgan wants to be a bank with everything -- with retail banking, investment banking, asset management, and credit card divisions all under one roof. To that end, recently JP Morgan integrated with Bank of New York, where I was a customer. I always say seeing is believing. Bank of New York was suffering from poor performance before JP Morgan stepped in, and already, I see signs of improvement. JPM is also dedicated to controlling expenses at these branches, which will help its retail division.

Even more, I'm a big fan of JP Morgan's innovative and strong-minded CEO, Jaime Dimon, who took the helm of JPM in 2006, coming from Bank One. Particularly strong first quarter results showed a 55% net improvement over the same results last year (though, to be fair, I should mention that in part this was due to a new accounting rule adding a one time gain of $391 million). The investment bank division is going gangbusters while retail banking and card services are showing flat growth, but I think this is about to change.

Acquisitions made in the past will continue to eat at profits, but under Dimon, the bank has set specific goals in each division to smartly cut costs and drive profits. I think we're going to see JP Morgan make solid gains in the coming years.

Type of stock: The third largest bank in the U.S., I think JP Morgan has great potential under Jaime Dimon, its CEO since 2006. JPM has been careful not to overextend itself in this period of economic prosperity, a prudent move in these rapidly changing economic times.

Price target: Currently trading at $49.82, I think this is one of the few financial institutions that it is a good buy
right now. We should see JPM hit $65, maybe even by year's end.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com

Citigroup Inc. (NYSE:C) is expected to cut 15,000 jobs and take a $1 billion charge as part of a restructuring plan it will announce in the next few weeks, according to media reports.

The company, which is also looking at big acquisitions including Japan's Nikko Cordial and reportedly ABN AMRO, is due to announced first quarter results April 16, the day before its annual meeting. The Wall Street Journal (subscription required) is reporting that the company wants to unveil its restructuring plan before then.

Chief Executive Charles Prince has a big challenge. As the Journal points out, Prince can't cut too deeply because morale could suffer and if he's too conservative big shareholders will be angry. Citigroup also needs enough offices and people to meet its goal of boosting international revenue to 60 percent of total sales from about 44 percent, the paper said.

Citigroup. whose shares have underperformed its peers, is going in a million different directions at the same time.

How can the company go on an acquisition binge and undertake a restructuring at the same time? It doesn't make any sense.

This plan doesn't seem to address the concerns of Prince Alwaleed bin Talal, Citigroup's biggest individual share older who last year called for big cuts to expenses.

Something is going to have to give here.

Either Citigroup will have to cut a lot more jobs or give up on huge acquisitions for a while. Until the dust settles, shareholders are going to stay on the sidelines.