Bank Failure Fridays have a certain consistency to them these days. It’s late in the day, the summer heat is beckoning, and an email or two comes across describing that week’s financial sector carnage. And it’s on to the barbeque.

But today’s excellent Wall Street Journal article on the deficiencies of the banks being called on to acquire the financial rubble of other banks deserves wide reading and kudos. The article calls into question two basic premises of the Federal Deposit Insurance Corp.: that it knows what it is doing and that it is taking care of problems.

From the WSJ data, it seems as though the FDIC is making the financial state of certain banks worse. The WSJ reported that in some cases, the banks bailing out “troubled” banks were anything but sound. PrivateBancorp of Chicago seems to be the worst culprit. PrivateBancorp took over more than $900 million of Founders Bank assets – even as PrivateBancorp’s commercial real estate assets equal 590% of its tangible common equity (26% is the national median) and the bank uses brokered deposits to run up its corporate loan portfolio by 326% since the end of 2007. Not exactly a poster child for sound, traditional banking practices.

Should we be surprised that the FDIC is essentially aggregating banking risks, rather than diffusing them? Of course not. The FDIC has been a party to the bailouts of Citigroup, Wachovia and Wamu – all of which resulted in greater systemic risk to the US economy, not less (check out the Pick-a-Pay mortgage portfolio of Wells Fargo via Wachovia; talk about a smoldering volcano waiting to erupt).

This is probably a good time for me to address the recent New Yorker profile of Sheila Bair, chairwoman of the FDIC. The profile painted Bair as an isolated government regulator trying desparately to contain the pro-big-bank agenda of Timothy Geithner and Lawrence Summers, to name just two government officials. The proof? Well, Bair gave a speech or two railing against subprime lending and systemic risk. The problem is Bair failed to stop either, and the article simply misses this point entirely. Facts are facts and no speech, however eloquent, changes the results on the ground. Now, the results on the ground appear to be worse than expected. Maybe The New Yorker will issue a correction?