On Thursday, the Federal Deposit Insurance Corp. (FDIC) is expected to propose new guidelines for private-equity investors seeking to buy failed banks. Those guidelines are intended to ensure that these largely unregulated firms don't take too many risks with troubled banks or buy and flip them.

The new rules come as private-equity firms have grown increasingly active in the banking sector. FDIC Chairman Sheila Bair said she's comfortable with the private-equity deals the agency has struck for failed banks such as IndyMac and BankUnited, but that a more structured process needs to be put in place.

A few weeks ago Dodd's Senate banking committee held hearings on the need for regulation of the financial industry. Present were 10 regulators each from one of 10 different regulatory bodies. Dodd commented: "the picture of 10 people was the picture of the problem."

So it seems that we have too many regulators, none of whom were able to individually or collectively deal with the recent financial debacle. Now lawmakers are trying to figure out what to do and how to do it. Obviously there will be fierce power struggles among the existing agencies. Hal Scott, professor at Harvard University said: "its grown topsy turvy since the civil war driven by a reaction of events -- the turf was where industry always wants its own regulator that they can be more comfortable with."

The Wall Street Journal asks the question (subscription required) "Is the government charging too little for the remains of failed mortgage lender IndyMac?"

The FDIC sold the corpse of IndyMac to a consortium of hedge funds run by a slew of highly-respected investors. The deal even includes a loss-sharing agreement.

The specifics of the deal are admittedly far beyond my understanding, but here's my questions: The Treasury has spent hundreds of millions of dollars buying "bad assets" from various banks -- why didn't these brilliant hedge fund managers go and outbid the Treasury for those assets instead of buying IndyMac from the FDIC?

Presumably, they think this represents a better opportunity. Our federal government is currently buying assets that private investors don't want while selling them stuff that they do. And who gets to decide what to sell and what to buy? Not the federal government!

Something tells me the taxpayer will be the one who gets screwed. But that's nothing new.

TheStreet.com's Jim Cramer says we need the private sector to get involved.

We got out of the 1989-1990 S&L debacle -- which, we often forget, wiped out almost every savings and loan besides Golden West and Washington Mutual (and we know how those played out this cycle) -- by gigantic government giveaways that made anyone with capital feel like a chump for not buying a savings and loan from the RTC.

Here we are again. Easy terms by the feds, and we have private capital -- unscathed from bad investing in the sector -- stepping up and buying IndyMac. The outrage is palpable from the usual sources, including from my friend Peter Eavis, who correctly points out in The Wall Street Journal this weekend that this was a sweetheart deal for these hedge fund managers, and not for the government. He's smart, he's right, and I said, hallelujah.

If we are ever going to get the private sector to wake up from its Rip Van Winkle status, the government is going to have to start giving individual investors and hedge funds and private equity firms some wins, something tempting, which is what the investment banks -- remember them? --used to do after a spate of underwritings got creamed from the get-go. After the TPG destruction in Washington Mutual, the hedge funds and private equity have avoided this sector like the plague. Now, Steve Mnuchin, son of my old boss at Goldman (NYSE: GS) (Cramer's Take) and a really smart -- AND GREAT -- guy, is jumping in as CEO of IndyMac. If people as smart as Mnuchin want in, you want in too, although it is helpful to remember that the FDIC has already restructured IndyMac and absorbed tons of the bad loans. It is also the lab for what works and what doesn't when it comes to workouts.

July 14 -- Dow 11,055 (down 45 points); trading range, 327 points

The third-largest bank failure in U.S. history made headlines after IndyMac Bancorp collapsed following a run on the bank.

An FDIC takeover of IndyMac attempted to keep operations as normal as possible, but doubts began to arise about other troubled regionals like Washington Mutual (later sold to JPMorgan Chase) and National City (now a part of PNC Financial after an October "take-under," where the company was purchased at a discount to its stock value).

But wait, there's more. After years of financial shenanigans and controversy, Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) were placed into conservatorship in a federal takeover of the government sponsored enterprises. This contributed to another slaughter in the financials, with 96% of the sector posting a loss for the session.

Oh, and if you wanted to drown your sorrows over an American-owned brew, scratch Budweiser off your list. Anheuser-Busch agreed to merge with Belgium's InBev for $70 a share, or $52 billion.

Greg Tucker is the executive editor of OptionsZone.com.

IndyMac Bancorp.'s failure, along with the failure of seven other banks this year, has erased 17% from an FDIC insurance fund, and will likely propel an increase in insurance fund premiums, Bloomberg News reported Monday.

IndyMac may cost the fund $4-8 billion, in addition to $1.16 billion in earlier bank foreclosure costs, Bloomberg News reported Monday. Premiums for the deposit insurance fund are likely to rise, an FDIC official said.

Economist Peter Dawson said Monday a premium increase would represent the most prudent course for the FDIC.

"Needless to say, given the bank failures, this doesn't come as a surprise or a shock. The FDIC could have explored other funding options, but given the scope of the insurance funds claims, a premium increase would make the most sense at this time," Dawson said.

The FDIC is required to replenish the fund when the reserve ratio, or the balance divided by insured deposits, slips below 1.15%, Dawson said.

I've always been a fan of another week coming to an end -- marking Friday's showing with a salutatory TGIF. It's a day that most Americans spend getting comfy for the weekend, hitting a club, taking a road trip, etc. But before you rush to the ATM to withdraw cash for your weekend rendezvous, you might want to pay close attention to whether your bank will still be in business by Monday morning.

Nearly 10 banks have failed so far this year and as financial institutions struggle with billions of dollars worth of sour mortgage portfolios, you can best believe that more failures will soon follow. And after analyzing recent collapses, a pattern seems to be developing.

Recent Bank Closures:

• IndyMac Bancorp., seized on July 11 -- a Friday.
• 1st National Bank of Nevada and First Heritage Bank, both seized on July 25 -- another Friday
• And on Aug. 1, First Priority Bank of Bradenton, Fla., seized on -- you guessed it -- a Friday.

Is it just a coincidence or are bank regulators being slick about shutting them down after the close of business Friday when the public is less likely to be watching? I've wondered about this fact and have seen others express the same concern on message boards. Or how about trying to to avoid a panic, which led to the run on IndyMac?

Whatever your pick, be forewarned. Mind your assets -- it's OK to be fashionably late for the party. Cheers!

Last week, our country suffered its second biggest bank failure in history. But since it was an FDIC insured institution, this means that depositors had nothing to worry about as long as they had less than $100,000 in each account, right?

Well, that's what I thought when I heard that $32 billion IndyMac had failed. But a commenter on my Auction Rate Securities (ARS) post -- which now has 5,235 comments from people whose money is frozen -- told a chilling story with implications for everyone who keeps money at a bank.

As he said, "I've spent the past 3 days waiting outside an IndyMac branch. it was utter chaos. some people had funds that mysteriously disappeared from the IndyMac computer logs. (under 100 grand). bumbling FDIC officials, depositors fighting, people passing out from the heat, elderly folks collapsing when they realize their life savings were not insured...and even those who had under 100 grand are having some difficulty getting other institutions to accept the IndyMac checks."

If you have deposits in a bank that looks like it's in trouble, get your money out before the FDIC takes it over. Do you really want to spend three days waiting in line to access your cash? As the commenter advised: "While you may be within the insured limits at your bank, like i was, you still want to avoid banks that are in trouble. It's not worth the hassle."

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

When Countrywide fell apart, the government moved in and began to examine the company's loan practices for fraud. Perhaps history is repeating itself. The FBI has set up an office at IndyMac (OTC: IDMC) to investigate whether its loan practices were above board.

According to The Wall Street Journal, "Failed lender IndyMac Bank is among nearly two dozen banks under scrutiny by the Federal Bureau of Investigation for possible mortgage fraud." Both the media and the bank were thin on details, very thin.

The matter, and questions at Countrywide, raise the issue of where regulators were when these firms operating as normal, standalone businesses making hundreds of thousand of home loans each year. Consumers are not terribly well-served if the FBI or any other government agency gets into the act once all of the damage has been done.

If the FBI finds any wrong-doing, what then? Is there a way to make reparations to people who may have lost their home or paid mortgage rates and additional fees which were much too high? Management at some of these lending operations may get into trouble, but the victims are unlikely to be helped.

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

Last week, the FDIC oversaw the second biggest bank failure in U.S. history -- $32 billion IndyMac Bancorp (NYSE: IMB). I thought more would be on the way and this morning's New York Times estimates that 150 of the 7,500 U.S. banks will fail in the next 12 to 18 months. The FDIC only has $53 billion in its fund to cover bank failures so it is going to be needing much more cash, which it may get from raising insurance rates. No doubt those of us with bank accounts will pay the price.

For those looking to profit from this failure, it's time to get a hold of the FDIC's problem bank list and start estimating the ones that are most likely to get taken over. Here are some hints: look at their mortgages as a percent of total loans, their cash flow, when they have to pay back their debt, and the increase in the rate of their bad loans. The Times mentions two that are probably already on the radar of short sellers:

• BankUnited Financial Corporation (NASDAQ: BKUNA) in Florida, which trades at 77 cents a share and is probably too far gone to profit from as a short, went for $20 a share a year ago.
• Downey Financial Corporation (NYSE: DSL) in California, which trades at $1.69 today, traded at $65 a year ago.

MAJOR PAPERS:

• The Wall Street Journal reported that worries are deepening among regulators, executives and consumers about the U.S. banking industry following the federal government's seizure of IndyMac Bancorp Inc (NYSE: IMB).
• According to a person familiar with the situation, the Wall Street Journal reported that Banco Santander SA (NYSE: STD) is nearing an agreement to buy Alliance & Leicester for around $2.38B.

OTHER PAPERS:

• Yahoo! Inc (NASDAQ: YHOO) chairman Roy Bostock called Microsoft Corporation's (NASDAQ: MSFT) proposal "ludicrous". Bostock said that "while this type of erratic and unpredictable behavior is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders." Yahoo reaffirmed that it is open to a sale of the company for $33 a share, the New York Times reported.

WEB SITES:

• CNet reported that the price of the Xbox 360 Pro model with a 20GB hard drive was cut by Microsoft to $299 from $349. The company also introduced introduced a 60GB model to go on sale in the U.S. and Canada in August for $349.

After the implosion of IndyMac Bancorp (NYSE: IMB) and news of the deterioration of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) last week, there's bound to be a certain level of trepidation as the earnings crunch begins this coming week and many big financial companies report. Here's a look at what Wall Street was expecting (see The week in preview: Expectations as the earnings crunch begins for expectations of other reporting companies.)

Analysts surveyed by Thomson Financial are expecting the following of companies to report lower earnings when compared to the same period of the previous year.

• JPMorgan Chase & Co. (NYSE: JPM): 44 cents EPS (-63.3%) on sales of $16.4 billion (-13.2%)
• Comerica Inc. (NYSE: CMA): 51 cents EPS (-59.2%) on sales of $680.2 million (-7.3%)
• Zions Bancorp. (NYSE: ZION): 75 cents EPS (-47.6%) on sales of $627.3. million (+2.7%)
• Huntington Bancshares Inc. (NYSE: HBAN): 23 cents EPS (-32.4%) on sales of $617.1 million (+50.7%)
• Capital One Financial Corp. (NYSE: COF): $1.31 EPS (-30.7%) on sales of $4.4 billion (+7.8%)
• Wells Fargo & Co. (NYSE: WFC): 50 cents EPS (-25.4%) on sales of $10.7 billion (+7.7%)
• M&T Bank Corp. (NYSE: MTB): $1.50 EPS (-23.1%) on sales of $756.6 million (+1.6%)
• BB&T Corp. (NYSE: BBT): 69 cents EPS (-16.9%) on sales of $1.8 billion (+5.9%)
• U.S. Bancorp (NYSE: USB): 60 cents EPS (-7.7%) on sales of $3.8 billion (+8.3%)
• PNC Financial Services Group Inc. (NYSE: PNC): $1.16 EPS (-7.2%) on sales of $1.9 billion (+8.5%)

I've lived through the internet bubble (and have some scars) and tried to avoid the real estate bubble (it wasn't easy). But, bubbles have a way of being painful and longlasting.

So, no doubt, the real estate bubble has been painful (may be the worst market for at least the past 50 years). But, could this be a short-run thing?

Perhaps so. In fact, this is the view from the front-cover piece in this week's Barron's [a paid publication]. Actually, there may be the start of a real estate recovery by the end of this year.

This is certainly a controversial stand. Keep in mind that inventory levels are stubbornly high (helped by foreclosures) and housing prices seem to fall further and further. What's more, the credit crunch is still here and there are serious problems with major real estate operators, such as with the implosion of IndyMac Bancorp (NYSE: IMB), as well as the deterioration of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

OK, so why the optimism? Well, if you peel back some of the recent housing data, it appears that things are stabilizing in terms of home sales and inventories. Basically, market forces are making the necessary adjustments.

TheStreet.com's Jim Cramer says both oil futures and equity futures can move these hot issues.

Will the futures pull down the oil and gas stocks today? No, I don't mean the oil futures, I mean the equity futur

Last week when oil exploded, we caught two days of trading that dropped the stocks hard. We caught a bit of a bid in the nat gases like Chesapeake (NYSE:CHK) and Devon (NYSE:DVN) but at the end of the day, but the stocks were truly overwhelmed by the simple fact that they are in the indices.

This pattern has really held down the integrateds: last week Conoco (NYSE:COP) should have exploded, but it couldn't because it is such a big part of the S&P. Chevron (NYSE:CVX) and Exxon (NYSE: XOM) are no different.

The natural gas stocks are not as big a factor, but they can be rocked down without a problem.

I am not saying to avoid looking at the oil futures. They can control the stocks. I am saying that the equity futures tide can take down anything, even when the oil futures spike hard.

TheStreet.com's Jim Cramer says there are problems, but nothing looks dire.

The setup is pretty good here. We've got a mildly oversold market with lots of June money expected to come in as CDs roll over and people realize that the cash rates are so bad. We have no earnings news, which is good, given that unless you do a lot of business overseas without a lot of raw cost escalation (think everything from Emerson (NYSE: EMR) (Cramer's Take) to Heinz (NYSE: HNZ) (Cramer's Take)) or you transport or mine oil, minerals and agricultural goodies, you aren't doing all that well.

We have the possibility of some stability in energy, as $130 has been difficult to punch through, even though we have not been able to build any inventories yet despite all we hear about how people are driving less. And the expectations for the employment number are so weak that if we get any job creation we are going to begin to hear that maybe the economy is on the mend.

Again, that's considered antithetical given the sinking home price/escalating food and oil price one-two punch. But, as I said last week, there is a finite nature to the bad loans.