We've seen 69 bank failures so far this year. That's nothing compared to what we are going to see in the coming months.

FDIC Chairman Sheila Bair is predicting that the bank failure rate will increase tenfold, according to a U.S. Senator.

Bair said up to 500 more banks could fail, Sen. Jim Bunning, R-Ky, said in a meeting, reported Dow Jones Newswires.

That would put the current crisis close to the level achieved during the late-1980s savings and loan crisis, when 745 thrifts were shut.

"She told us that unless something dramatic happens, we could lose up to 500 more banks," Bunning said.

Speaking of the FDIC, their fund that covers the losses of depositors will be completely wiped out in the coming weeks.

Austin, Texas based Guaranty Bank just updated its bank reports to show a $1.8 billion loss for the 1st quarter, of which $1.6 bil was due to “Other-Than-Temporary Impairment Charges on Debt and Equity Securities”. Um, not good.

The seizure by the FDIC will hit the regulator’s budget to the tune of at least $5.3 bil according to sources within the OTS. This, on top of what’s going on with Colonial bank failing, should wipe out what’s left of the FDIC’s budget. As a result, they are going to have to borrow from Treasury and then add that cost to our nations banks, which we all know just gets passed on to the taxpayer in the form of higher banking fees.