When banks fail, the FDIC usually takes over and protects small depositors, and that's a good thing. That happened 3 times in 2007. In little more than half of 2008, there have been 11 such failures and probably more on the way.[1] There are others who will not be protected. Each failure is another, sometimes large, dent in the economy.

"Officials from the Bush administration and the Federal Reserve on Friday called in top executives of Fannie Mae and Freddie Mac, the mortgage finance giants, and told them that the government was preparing to place the two companies under federal control." --NYT reports

What's the cause of this? When politicians talk about big government they're talking about deregulation. We've had a rash of that. When democracy fails to keep an eye on capitalism, this is what you get.