Even Dick Cheney could not have missed. E-Trade looked like a sitting duck for a takeover by one its rivals TD Ameritrade and Charles Schwab. E-Trade’s shares have fallen almost 80 per cent since June and the online broker needed fresh capital. Meanwhile, consolidation has long made sense in that sector, given the huge cost savings on offer.

So why did neither pull the trigger, allowing hedge fund Citadel to swoop in and take a dominant stake instead? And why have other financial companies not rushed in to take advantage of their rivals’ distress through acquisitions?

The short answer is uncertainty. Even the stronger companies in the financial sector are hoarding capital during such a volatile environment. Having positioned themselves well, by luck or design, they hardly want to jeopardise their security by taking on someone else’s problems, unless they are very sure of a deal.

The last thing a buyer wants is to rush in and buy cheap-looking companies if the value of mortgage- backed instruments on their books could fall even further. Also, there is growing fear that the US economy could weaken significantly into next year. If that is the case, financial companies could suffer bigger loan losses and become even cheaper. Finally, they might prefer to raise pricey new capital to stabilise their businesses, rather than selling out completely at a price distressed enough to attract a buyer.

Getting the timing right is tough. Witness Bank of America. It injected $2bn into Countrywide in August. The mortgage lender’s shares have since slumped.

There will be ample opportunities for canny investors willing to inject capital into US financial groups. But do not expect a run of mergers or acquisitions unless the uncertainty subsides. By then, of course, buyers of companies such as E-Trade are unlikely to get such a bargain.

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