The Treasury’s plan to inject $250 billion in capital directly into US banks is underway. But William Patalon III says some of these taxpayer funds will be used by big banks to acquire junior competitors. This means the increase in lending that the plan is supposed to spark will be modest at best. And less competition in the banking sector could mean a rise in fees going forward.

Investors need a solid defense right now, says Martin Denholm. This means holding high-dividend stocks. Consumer staples and telecoms industries are the best places to cherry pick strong companies. For a lower-risk alternative, try these two high-dividend ETFs (AMEX:SDY, PEY).

What They’re Saying About The Financial Sector Sounds Nice… As I was running to catch my early morning flight on Saturday, I grabbed a copy of the New York Times and Barron’s. I looked at the Barron’s cover and figured that I must not have gotten enough sleep and was still in dreamland.

The last time I recommended a bank to anybody was last August. And it was a Canadian Bank – Bank of Nova Scotia (BNS). Once upon a time – not that long ago – banks were solid, safe investments that generated a steady stream of income through the dividends they issued.

Three major U.S. banks - including Fifth Third Bancorp. (FITB) and Wachovia Corp. (WB) - got clobbered in recent days on the news that they’ve lost another $1.6 billion by making investments in the Citigroup Inc. (C) Falcon hedge fund that lost 75% of its value earlier this year.

Pop quiz: Over the past six months, one sector of the market has seen more insider buying than any other. Can you name it? If you think it’s technology, you’d be wrong. Yes, the sector has enjoyed a resurgence in recent months, but not enough to whip up a heavy enough wave of insider buying as the sector I’m talking about.

Fifth Third Bancorp (FITB) is eying larger rival National City Corp. (NCC), the ninth-largest U.S. bank with approximately $150 billion in assets, as a potential acquisition target, according to several media reports.