"We believe the credit crisis is far from over," Whitney wrote in a research report in late May as Money Morning reported. "In fact, we believe what lies ahead will be worse than what is behind us."

Investors barely had time to recover from the devastating failure of The Bear Stearns Cos. Inc. (BSC), at the time the fifth largest Wall Street investment bank before witnessing the plunging market capitalizations of twin mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE).

It seems Whitney’s call of a deepening banking crisis has indeed to come to pass, but it’s still unclear how much further we have to go as national and regional domestic banks alike struggle to keep afloat. Other analysts and industry insiders have started to echo Whitney’s earlier prediction.

“We have seen a ‘too big, too important to fail’ instance,” William Gross, the chief investment officer of PIMCO’s bond fund, told The International Herald Tribune, referring to the government bailout of Bear Stearns and the recent plan to save Fannie and Freddie.

“The market wonders: which institution is too small to bail out? Where is the dividing line? They seem to have picked on the regional banks as potential candidates to be the ones too small to bail out,” Gross added.

Current analyst predictions say as many as 150 out of the 7,500 domestic U.S. banks could fail over the next year to 18 months, IHT reported.
Customers are already clamoring to withdraw money from regulated thrift IndyMac Bancorp. Inc. (IMB), which was seized by federal regulators prior to the weekend. Meanwhile, Ohio’s National City Corp. (NCC) is doing its best to keep from being the next failed financial intuition as it works to dispel rumors of a run on its own deposits.

“It’s about to start getting real bad,” Christopher Whalen, managing director at Institutional Risk Analytics, told IHT. The Federal Deposit Insurance Corporation should just move on with the process and “close not just one but a half dozen institutions at the same time.”