Despite the fact that the $250 billion the government plans to invest in banks is intended to help them make new loans, J.P. Morgan Chase, BB&T, and Zions Bancorporation are among the financial institutions hoping to use the money to acquire other banks.

While some experts are worried such deals could further the trend of creating banks “too big to fail,” others believe they could prevent the failure of numerous small banks and boost the economy.

U.S. Treasury Secretary Henry Paulson acknowledged that the money could be used to acquire smaller, weaker banks. He stated, “There will be some situations where it’s best for the economy and for the banking system for there to be a consolidation.”

Source: Washington Post, Peter Whoriskey and Zachary Goldfarb (10/22/08).