So what does the FirstMerit Corp risky bid for Citizens Republic Bancorp have to do with the Fed's latest round of quantitative easing?

Not much at first glance, but Christopher Whalen with Tangent Capital – and a frequent contributor to HousingWire – declared such a move unusual for a solid performer like FMER, which carries in Whalen's own words a "default rate of less than 1% of total loans." So it's a questionable strategy to then nab a bank in the depressed economy of Flint, Mich.

Not to mention, Whalen points out that FMER's acquisition target "was puking blood, at least in a figurative sense, not even a year ago with a default rate north of 700-basis points."

Why would a good bank buy a bad bank?

But Whalen sees the Fed's hands indirectly behind the deal. Most of FMER's risk is carried in its securities portfolio as opposed to the lending side of the house. 

Whalen writes: "FMER is paying $900 plus million for CRBC and will also redeem $345 million in TARP paper held by Tim Geithner at the US Treasury. Hello?? Does $1.3 billion in total consideration for a bank that is the outlier in its asset peer group seem a tad rich?  Maybe that is why Standard & Poor's revised FMER’s outlook to negative from stable yesterday."

Still, Whalen sees something else prompting the deal—namely another round of quantitative easing or the continuation of excessive Fed intervention.

"A number of community banks vocally opposed the latest QE by the Fed, in part because purchases of paper by the central bank forces banks to take greater risks," he wrote. "As net interest margins in the banking industry steadily fall, look for ever more acts of stupidity like this transaction."

You can read the full Whalen post here.