"Credit is important, because it's what allows us to buy things," and that's good for the economy, Schaefer said. "The problem is, loans have been too easy to come by. ... We want loans to be appropriately difficult to come by — we don't want them to be impossible to get. The risk we run right now is credit will be too hard to get."

• What will happen if the government doesn't step in?

When banks fail, their problems fall in the lap of the FDIC — even when another bank buys them up as quickly as JPMorgan Chase bought Wachovia and Citigroup acquired Washington Mutual in the past week, Schaefer said. The government takes control of failed banks. When a buyer comes along, the government agrees to cover their losses after a certain amount and sells the assets.

"I think a lot of confusion people have is, 'Let's not pay anything' is not an option at all," Schaefer said, referring to a bailout or other government intervention in the situation. "It comes down to 'let's minimize our losses,' because the losses are locked in for the taxpayer."

E-mail: jtcook@desnews.com