Looks like someone finally realizes that a whole gob of small banks failing can add up to systemic risk. Duh.

The Huffington Post is reporting a plan to bail out the smaller regional banks and community banks is in the works.

Treasury officials and regulators are weighing a fresh round of bailouts for banks that were deemed too risky to qualify for earlier aid.

Representatives from the Treasury Department, Federal Deposit Insurance Corp. and House Financial Services Committee discussed the plan by phone Thursday, said California Bankers Association Chairman Dan Doyle, who was on the call.

Looks like they are making it restrictive, the money will come from the existing TARP fund and the limit would be $5 billion in assets.

As usual, the spin is this will increase consumer lending. Most amusing, some officials claim the original TARP was intended for banks that were healthy. Ha ha ha, right o, Citigroup is healthy, AIG is healthy.

House Financial Services Committee Chair Barney Frank is supportive of the move, but we'll have to wait for the plan, to see if it's just for show for the smaller community banks, similar to homeowner mortgage help.