Nine more banks failed on Friday. But the big news struck on Sunday—101-year-old cit Group went bankrupt, bringing the total to 116 for the year. It is a bad—and pertinent—omen. Mortgage defaults are still growing, and now commercial real estate looks set to inflict another wound to the shaky banking sector. The economy is crumbling and confidence in the government is breaking. But as bad as it seems, conditions are going to get worse because America hasn’t learned from its mistakes.

In fact, America is taking the very mistakes that caused the crisis and making them even bigger.

Denise Tejada is a 20-year-old California woman who just bought a $183,000 home. It is her first, but more purchases will be on the way, she says. Tejada’s case is evidence that the housing bubble could be far from over.

Where was this young, high-school educated, first-generation immigrant from Guatemala able to find $183,000? The money didn’t come from savings, although she is holding down three jobs. It didn’t come from her parents either, nor did she win the lottery.

Tejada got the money the same way most homebuyers do. She borrowed it.

But who would be willing to take such a risk? Who would so casually disregard the record of millions of other Americans who are defaulting on their loans? Who could part with so much money when the borrower (Tejada) isn’t even required to put a single dime of her own money into the house as a down payment? Who would give someone so much money that she requires three jobs to afford the payments?

Only you!

That’s right, you! And not only did you enable her loan, you actually paid Tejada additional money out of your own pocket to buy a house. How nice of you.

How is this possible? Every one of the 183,000 dollars it took to purchase and remodel the former gutted “box” with no bathroom or kitchen came guaranteed by the Federal Housing Authority—which means taxpayers are on the hook if Tejada defaults. And thanks to Congress’s first-time-homebuyers credit, an additional $8,000 will go straight out of your pockets and right into Tejada’s purse come tax time.

Only in America. It almost sounds like something out of a fairy tale where everyone everywhere can have free money. Where else in the world will the government actually borrow money from other countries to not only give you a loan, but pay you to take it?

Doesn’t anyone remember that one of the main causes of the housing bubble was too many people buying homes they couldn’t afford with loans that didn’t require them to put any of their own money on the line in a down payment?

The government hasn’t learned a thing.

Private industry seems to have learned. During the years leading up to the housing bubble, the government put extreme pressure on Wall Street to lend money to unqualified borrowers under the guise of social justice. This led to the relaxation of lending standards to the point where there were no lending standards. No job, no income, no assets? No problem!

Then the housing bubble exploded—almost taking the whole financial system with it. Understandably, the surviving banks are no longer so eager to lend. They are unwilling to commit their money to a sector in which the collateral is depreciating, especially when the economy is shedding hundreds of thousands of jobs per month. When private banks do risk their own money, they make sure that the borrower has some skin in the game too.

Not the government. The government has gone full speed ahead with subprime lending—seemingly heedless of future losses. Fannie Mae and Freddie Mac, the multi-trillion-dollar mortgage giants that are stuffed to the brim with garbage mortgages, were taken over by the government when they looked ready to fail. Has anything changed since?

The change is this. Instead of the twins (Fannie and Freddie) providing the bulk of money for junk mortgages, the government has mandated two other government corporations pick up where the mortgage siblings left off. Ginnie Mae is the new organization charged with purchasing mortgages and then (hopefully) bundling and selling them to investors, while the Federal Housing Authority makes this all possible by guaranteeing the mortgages (with taxpayer dollars) against default.

Putting a new name on the same game doesn’t fix it.

According to a report conducted by the Inspector General’s office, the default rate on loans guaranteed by the fha has grown to 7 percent—twice the level considered safe. A whopping 13 percent of the loans it has chosen to back (with tax dollars) are already delinquent. Consequently, the fha’s reserves are down to a miniscule 3 percent. With a debt leverage ratio of 33 to 1, the company is now in “Bear Stearns territory.” The Wall Street Journal says the fha will soon need to be bailed out too.

Between Fannie, Freddie, Ginnie and the fha, an astounding near 90 percent of all loans being issued in the United States are now backed by the government. If home prices continue to fall, and defaults continue to grow, these organizations have the potential to destroy government finances. Yet instead of trying to mitigate this unfolding disaster, America is actually plunging in deeper.

But it is not just in irresponsible lending that the government hasn’t learned its lesson.

There has been much talk about increased oversight of the banking industry, but it is mostly talk. With regards to accounting procedures at banks, the opposite has actually occurred. To stop as many banks as possible from failing, the government watered down the accounting rules.

Under the old, more enlightened rules, when banks reported what their investments were worth, they had to do so based upon what they could actually sell those assets for in the marketplace (what they were actually worth). It was called “mark to market” accounting. This system was designed to keep banks honest and protect shareholders and depositors.

Under the new laws, banks no longer have to mark-to-market their assets. For example, if a bank owns a bundle of mortgages, instead of reporting what those mortgages are actually worth if it were to sell them today, the bank is allowed to report their value based on what it thinks the bundle of mortgages will be worth in the future. The same goes for undefined trillions of risky speculative derivatives positions and other exotic assets.

But banks have no better idea what their investments will be worth in the future than you or I do. If they did, they would not have issued all the risky subprime mortgages in the first place, and Bear Stearns, Lehman Brothers, Washington Mutual and cit Group would still be with us today.

The result is a banking system filled with insolvent banks operating under the guise of solvency.

The financial system is growing riskier by the day.

America hasn’t learned anything. The relationship between credit rating agencies and the banks hasn’t changed. The independence of house appraisers is, if anything, more compromised. And America still thinks it can solve its economic problems by throwing money at them. Now the nation has even more debt than it had at the beginning of the recession.

America is heading toward another crash, and it will make the last one pale in comparison. America will wish it had actually made an effort to change its ways.

The fundamentals of America’s economy are unsound. Until they are replaced, conditions will continue to deteriorate. In the meantime, jobs will continue to be lost, banks will continue to fail, and faith in the U.S. government and America’s economic system will continue down the drain.

Be prepared for much worse to come.