A consolation of failure should be lessons learnt from the experience. So it is troubling that bank collapses in this cycle are proving more expensive than in the past. Big bank busts, as a rule, cost relatively less than small ones. Estimated losses, say, from last week's failure of Colonial, the Alabama-based lender with $25bn in assets, were unusually low at 11 per cent of assets. Its sale also included the first “clawback” allowing the Federal Deposit Insurance Corporation to share in a buyer's potential gains. Yet analysis from Ely & Company, industry consultants, shows that across all failures in the past two years, the FDIC estimated its losses at a quarter of failed banks' assets. That is much higher than between 1980 and 1995, when failures cost an average of 11 per cent.

Regulators are at fault. The fact that banks are in such sorry states by the time they fail suggests intervention should be occurring earlier – especially where soaring brokered-deposits indicated rapid growth in low-quality assets. Meanwhile, drawn-out sales processes – like that being undertaken for Texas' Guaranty Financial, with $16bn in assets – risk hurting the underlying business while a lender's fate is decided.

However, fears that the FDIC's fund which protects depositors may run out are unfounded. True, its balance fell to $13bn at the end of March, or just 0.27 per cent of insured deposits – well below the statutory minimum. But that understates the funds available to absorb future losses. The FDIC also had $28.5bn set aside for future bank failures. More importantly, it has a Treasury credit facility, increased to $500bn during this crisis.