Also hovering over the entire consolidation debate, of course, is the question of whether regulators would permit a new wave of takeovers in the industry.

In the past regulators have permitted depositors with funds in excess of $100,000 to lose their funds in failures of small banks and savings institutions.

Automated teller machines, the Internet and ever-faster computers have greatly eased interstate banking, encouraging the rise of fewer and larger banks once regulators permitted it.

If regulators had permitted him to keep running Lincoln, he argues, he could have earned his way out of the hole.

"The regulators would never permit such a deterioration," Mr. Ohlig said.

In 1988, regulators permitted Centrust to stay in business after David Paul, its chairman, agreed to raise capital by selling $30 million in bonds.

This occurs as regulators permit greater freedom and non-government ownership, in steps that are usually decades apart.

Neither bank shareholders nor regulators would permit such loans without guarantees.

Trying to keep Madison afloat, regulators last year permitted the bank to borrow heavily from the Federal Reserve.

Today's any-merger-goes regulators permit cross-ownership of content and distribution while encouraging corporate titans with swollen egos to gobble up competitors or suppliers.