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The 28 branches of 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed Friday by federal regulators.

The banks, owned by Scottsdale, Ariz.-based First National Bank Holding Co., were scheduled to reopen on Monday as Mutual of Omaha Bank branches, the Federal Deposit Insurance Corp. said.

The FDIC said the takeover of the failed banks was the least costly resolution and all depositors – including those with funds in excess of FDIC insurance limits – will switch to Mutual of Omaha with “the full amount of their deposits.”

The FDIC also said accountholders can access their funds during the weekend by writing checks or using ATM or debit cards.

It’s beginning to look as if Fortis was right. In June the Belgium-Dutch financial giant, itself beset by financial woes, warned, according to a Dutch paper, that the “complete collapse of the U.S. financial markets” was in the offing, just days or weeks away.

Maybe it won’t be a “complete” collapse, but the dire warning is beginning to appear more credible daily. Just days after the Fortis warning, letters from Senator Charles Schumer speculating about the “possible collapse of big mortgage lender IndyMac Bancorp Inc.” set off a run on that ailing mortgage lender with depositors withdrawing more than $1.3 billion in just 11 days.

In the weeks since there has been increasing speculation about the stability of both the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). These holdovers from the Roosevelt Administration’s ill-conceived New Deal presently own or guarantee half of the $12 trillion U.S. mortgage market, yet they were characterized recently as “insolvent” by former Federal Reserve President William Poole.

In a free market, when you perform poorly your business might fail. But Poole, a consummate government regulator, thinks Fannie Mae and Freddy Mac are too big to fail. “Clearly they must be supported,” he said according to a July 11 Reuters report. “They (the U.S. government) cannot allow that amount of assets … to go into limbo.” In other words, according to Poole, the federal government must take money (a lot of money!) from some and give it to others. As economist Frederic Bastiat eloquently pointed out, that is socialism, the law run amok and turned on its head.

On top of IndyMac and Fannie and Freddie, the bad news from the financial sector keeps coming. On Tuesday, Wachovia Corp. reported striking losses totaling nearly $9 billion for the quarter. “Our reported results today are clearly a disappointing performance for which we take responsibility,” Wachovia CEO Bob Steel told analysts on a conference call. The nation’s fourth largest bank also noted that it would eliminate as many as 10,750 positions.