FDIC Chairman Sheila Bair is predicting that the bank failure rate will increase tenfold, according to a U.S. Senator.

Bair said up to 500 more banks could fail, Sen. Jim Bunning, R-Ky, said in a meeting, reported Dow Jones Newswires.

That would put the current crisis close to the level achieved during the late-1980s savings and loan crisis, when 745 thrifts were shut.

"She told us that unless something dramatic happens, we could lose up to 500 more banks," Bunning said.

"That means that people who make mortgages in local places .... people that could really help in a foreclosure will not be there," Bunning said.

Regulators recently shut down the Bank of Wyoming on Friday, the 53rd failure this year.