Analysts believe that another 150 banks in the U.S. could fail over the near-term. According to The New York Times, "as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. " The failure of IndyMac (NYSE: IMB) puts more focus on the problem

That puts investors in region banks in a tough spot. Shareholders in firms like NCC (NYSE: NCC) have watched the value of their stock drop from $33.54 to $4.42 over the last year as the bank cut its dividend and raised money. These holders can get out now because they fear an event which could take shares down to pennies. Or, they can hang on and hope that, once the financial crisis has passed, they may make some of their money back.

In many cases, the stock price is an excellent indication of what stockholders might want to do. IndyMac shares are down 99%. NCC's are down 85%, and its viewed by most as a bank that will "make it" because it has raised more money.

It would appear that the banks that the market is most worried about are off 90% to 96%. The institutions in that category probably carry the greatest risk of failure, if the stock market is an accurate indicator. The "if" part is the hard part.

Douglas A. McIntyre is an editor at 247wallst.com.

The Wall Street Journal's [subscription required] David Wessel gets it. His analysis of the problems with the banking system and how to fix them are spot on. He thinks there are three steps to fix the system and I agree.

His three steps:

• Link banker's pay to the quality of the loans they originate
• Improve the quality of bank monitoring to increase transparency
• Stop letting the ratings agencies' clients pay for their ratings

I posted about these ideas last year. In this October 2007 post, for example, I commented on the importance of putting banker's compensation at risk when they originate loans. I thought that if bankers' bonuses were at stake, they would be more careful about the loans they originated. I also discussed the importance of transparency in reporting. And in this August 2007 post, I talked about how the ratings agencies were compromised by the fact that they were being paid by the people they were supposed to rate.

I like Wessel's ideas and I hope his powerful editorial pulpit helps to get them implemented.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Even the Fed is getting nervous about the market. This morning, it cut the discount rate from 6.25% to 5.75%.

The agency said its move was to promote the restoration of orderly conditions in financial markets.

The Fed's website carried a statement explaining the move: "These changes will remain in place until the Federal Reserve determines that market liquidity has improved materially."

The board's governors clearly believe now that tight credit conditions are killing the markets and threaten the economy.

The move is giving the market significant relief. S&P futures, which were down sharply early in the morning are now up 22 points and the market looks to open strongly in the green.

Douglas A. McIntyre is a partner at 24/7 Wall St.