The catalyst for this current crisis may be the housing market, but the larger culprit is the killing of Glass-Steagall, which paved the way for this recklessness.

Yet, rather than considering the massive risks of merging commercial and speculative banking interests, federal officials actually pushed for Bank of America's $50 billion all-stock takeover of Merrill Lynch. That knee-jerk move follows the same dangerous pattern that began when Citigroup took over Salomon Brothers in 1999.

The Fed wants to avoid another huge failure in Merrill Lynch by pushing it under the rug of Bank of America, but B of A can't possibly know the extent of Merrill's potential losses. That a commercial bank is taking over a speculative giant is much more dangerous than Lehman Brothers tanking. The Fed was well within its rights to say 'no' to Lehman's plea for a bailout. But unlike Lehman or Bear, B of A is responsible for the accounts of millions of customers—real people with real money on the line. If Bank of America gets in real trouble, the Fed's hand may be forced.

The speculative nature of the current banking industry, in which commercial and investment banks can borrow beyond their abilities to repay, is a threat to national economic security. Lehman's demise means the dumping of more worthless real estate investments into an already over saturated market. (If Lehman could have sold its assets for enough capital infusion, it would have done so.) Lehman's bankruptcy will only damage the market further, as other players find even less appetite for their real estate waste.

In all of this turmoil, citizens will see their ability to get loans, even if they are qualified, cut further. Bank of America, as one of the nation's leading lenders, would be wise to figure out what their risk is in taking over the behemoth that is Merrill, and quantify just how much capital it is on the hook for before extending any more.