TD Bank (NYSE:TD) will take a $255 million charge in the first quarter (after-tax, roughly 10% of expected profits), after it was hit with a $67 million verdict against it earlier this month, related to its role in Scott Rothstein’s $1.2 billion South Florida Ponzi scheme. This is just the first of several lawsuits to go to trial.

Bank of America (NYSE:BAC) has been permanently crippled by its exposure to troubled mortgage investments, says Chris Whalen, and would be worth more in pieces. The strongest banks, he says, are the ones without exposure to Wall Street, and his thought is that the big banks “are going to break up.”

CIT Group Inc.’s (NYSE:CIT) fourth quarter easily beats estimates, despite a 59% year-over-year drop in profit. The commercial lender saw reduced benefits from fresh-start accounting. A decline in problem loans and borrowing costs helped to beat analysts’ expectations, as loan volume increased across all business segments. It also redeemed about $860 million of high-cost debt during the quarter.

RBS’s (NYSE:RBS) former chief, Fred Goodwin is asked to step down as David Cameron hopes the move will deflect attention from his government’s inability to control bonuses at the 83% state-owned bank.

American International Group, Inc. (NYSE:AIG) and General Motors Company (NYSE:GM) will ultimately be hurt by the Troubled Asset Relief Program. TARP will impact AIG and GM in that the gains of $37 billion last year for the program will swing to losses of $23 billion in fiscal year 2012, which will result in steep declines in their share prices. Still, as of October, the Treasury had recouped $316 billion of the nearly $411 billion it used for bailouts.

Brian Belski, asks us to not be confounded by cheap valuations for financials and the sector’s fiercest January performance since 1997. He writes, the “whole new world” of heightened regulatory scrutiny and higher capital requirements is positive to hurt profits and share performance for long-term investors.

To contact the reporter on this story: at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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