Another day, another bank failure. And this time, it's the biggest in American history. Washington Mutual's $310 billion in assets, its enormous base of depositors putting in $188 billion worth of deposits and conservative risk management were supposed to protect it from collapse. That was not the case with regulators seizing its assets and selling them to JP Morgan Chase for a bargain basement price of $1.9 billion.

This was a company that at the end of last year had a market cap of $16.9 billion. And that's a seriously good price for JP Morgan Chase even after Washington Mutual's shares fell 25% to $1.69 (compared with $36.47 last October), which would still make it worth much more than $1.9 billion. Obviously, they were desperate to sell.

So the Paulson plan was not enough to save the 119 year old bank. but then, how could it? WaMu's credit rating had been cut to junk status by Standard&Poor's. It has already lost $6.3 billion on subprime mortgages and was facing $19 billiion in losses over the next two and a half years.

An even more interesting question is what happens to the Federal Deposit Insurance Corporation? It's acting as a receiver for these bad banks but does it have enough money left to do the job if more banks go under? Bloomberg reports that might need a $150 billion bailout.

"Americans had gotten used to the idea that bank failures were as rare as a category five hurricane. No banks went bust in 2005 or 2006. Seven collapsed in 2007 as the credit crisis began to exact a toll. So far in 2008, 12 more, with total assets of $42 billion, have fallen - that's the worst wave of bank failures since 1992 ... FDIC knows which banks are at risk; it has a watch list with 117 institutions. The agency won't disclose their names because doing so could cause depositors to panic and pull out all of their funds. It won't take many more failures before the FDIC itself runs out of money."

And once more, US taxpayers will be footing the bill, paying for the excesses of the reckless financial engineers who turned mortgages that everyone knew could not be repaid into AAA-rated assets.

This is just outrageous, and it will keep happening until the guilty are made to bear the cost.