TheStreet.com's Jim Cramer says that rather than merging, these banks will have to raise money through dilutive offerings.

The big difference between 1990s bank implosion and this one is that nobody at other banks sees any value in owning the ones that are faltering.

Key (NYSE: KEY) (Cramer's Take) is the latest example. Key's everywhere, it is grandfathered to be in every state. You would think there was some bank out there that would want it. Nope. No one. So they have to do this down round that destroys the common. Nobody wants Sovereign (NYSE: SOV) (Cramer's Take) either. Or Nat City (NYSE: NCC) (Cramer's Take). Or Washington Mutual (NYSE: WM) (Cramer's Take). The latter's really interesting now that Hudson City (NYSE: HCBK) (Cramer's Take) has passed it in market size because it says that all of those branches and all of that deposit base just doesn't mean anything. Or worse, the losses are so bad that unless the Fed takes the losses and puts them on its balance sheet, there can be no consolidation.

Yet consolidation is the only way to go. Now, we are much more laissez-faire then we were in 1990. The administration then felt engaged to move quickly to set up mergers instead of the charade of down rounds. I call them charades because none of them yet has produced a return for anyone who has put the money up.

Bank of America's (NYSE: BAC) (Cramer's Take) Countrywide (NYSE: CFC) (Cramer's Take) charade is the biggest of all. I make it 50-50 that CFC brings down BAC. I am not kidding. That's how badly that deal was thought out and how much bad product there is on CFC's books.

Bear wasn't a bank. Its failure was about counter party risk, basically whether Bear could take down JPMorgan (NYSE: JPM) (Cramer's Take), which was on the hook for the other side for a bunch of Bear trades, plus the Bear portfolio, which I am told was the worst of the worst.

Banks, on the other hand, do have worthwhile deposit bases. You can see that if the Resolution Trust for mortgages had been set up, the mergers would have occurred already with the surviving bank coming out strong and the defaults on the Fed's balance sheets.

Without it we are Japan, keeping everyone afloat.

I expect many more Key banks. The only way out of this jam right now is to hope that the value funds don't have their money taken away through horrid performance.

Then we will be okay. But it will be elongated and stubborn and not nearly done as we still don't know what properties were insured by insurance that is running out, and we don't know HELOC dispersal and losses by geography and vintage.

Too many wide open questions. Just think about who is the next Key and you won't make a mistake next time.

Random musings: Doug's dead right about Lehman's prospects as he has been all along.

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RELATED LINKS:
The Five Dumbest Things on Wall Street This Week: June 13
Key Takes a Charge, Raises Capital
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.