The bank failure scene in the U.S. turned a shade uglier over the weekend. By this time tomorrow, it’ll probably be even worse.

Alabama regional lender, Colonial Bank, just became the 6th largest bank failure in U.S. history and the largest since Washington Mutual last year.

A large “mystery” bank is scrambling for late night cash.   At the close of the quarter, an unnamed bank paid 7% for overnight money from the Fed.  The mainstream and the Fed claim this to be normal behavior at the end of the quarter, but don’t believe it for a second.

Citi merger talk, equity rebound prompt FX turnaround…  Sterling also rises as risk aversion cools… Weak euro zone PMI a reminder of economic distress

Analysts have been warning for some time that Washington Mutual (NYSE:WM) was on the brink of collapse.

Last night they were closed by the government and banking assets were sold to JPMorgan Chase & Co (NYSE:JPM) for $1.9 billion. Shares of Washington Mutual plunged $1.24 to 45 cents in after-hours trading.

Imagine waking up on a sunny Saturday morning to find you can’t use your debit card to buy groceries or pay for gas any longer? You can’t withdraw a single dollar from the ATM. And your bank froze your credit cards.