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

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Even if Ben Bernanke is right about the stress tests truly reflecting the “financial conditions” of the banks, it doesn’t matter much. Banks themselves are still worried that they won’t get paid back on old loans.

Commercial real estate at risk of default has quadrupled, according to a recent article in the Financial Times. It was only a matter of time before the consumer spending implosion destroyed the unsustainable increase in storefronts across America.

The week begins with a bang, according to the Financial Times. The FT reports that, “The Obama administration is gearing up for a ‘big bang’ announcement within the next two weeks that will combine a bank clean-up with measures to reduce home foreclosures and probably steps to kick-start credit markets.”

Two major U.S. banking deals were completed yesterday (Thursday), enabling the suitors to finalize the deals before 2008 came to a close. Bank of America Corp. (BAC) completed its purchase of Merrill Lynch & Co. Inc. (MER), creating the largest U.S. bank – as well as the biggest challenge yet for longtime BofA Chief Executive Officer Kenneth D. Lewis.

The residential real estate sector is in shambles and, some economists say, will not recover until the end of 2010, at the earliest. Now it looks like commercial real estate may be the next block to fall in our “Jenga economy.”

In the currency market, the dollar slipped against the euro. Late Monday, the euro was trading at $1.5491 vs. $1.5424 on Friday.