First, it was March that was the worst month for banks since the credit crunch. Then June came along and ruined the second quarter for so many financial institutions.

Now, it looks like July might win the contest to be the worst month for mortgage-related securities since the credit crisis began one year ago.

In its quarterly S.E.C. filing, J.P. Morgan Chase disclosed yesterday that it has already taken a $1.5 billion hit on its mortgage assets since July, as "trading conditions have substantially deteriorated versus the second quarter."  As of June 30, the bank held approximately $33 billion worth of mortgage-related securities on its balance sheet.

Of course, $1.5 billion isn't an alarming number for a bank the size of J.P. Morgan, especially considering how well it has performed during this credit crisis next to its competitors. (Click here for an interactive on bank losses.)

What's more troubling is what this could mean for the rest of the pack.

July was particularly tough for this market because it was a month that saw near-collapses of Fannie Mae and Freddie Mac. It was also the month when Merrill Lynch decided to unload the worst of its mortgage portfolio for whatever price it could get, which turned out to be 22 cents on the dollar.

Other banks will almost certainly follow suit, but not all of them are capitalized well enough to endure such potentially significant write-downs. They will likely need to raise more capital, which isn't easy in this environment. Merrill Lynch diluted its shareholders significantly when it raised $8.5 billion as it simultaneously wrote down $5.7 billion in losses.

Lehman Brothers has reportedly tried to find outside investors to help shore up its balance sheet to compensate for more write-downs. It is also weighing a sale of its Neuberger Berman business, according to several reports.

The mortgage market isn't likely to turn around anytime soon. Delinquencies from prime borrowers are on the rise, and the real estate site Zillow reports today that nearly one-third of all homeowners who bought since 2003 are now under water on their mortgages. All of this leads to even more pain from other banks with significant exposure to the mortgage market, including Washington Mutual, Citigroup, Bank of America, and Wachovia Bank.

But wait, there's more! It's not just about mortgages anymore.

Settlements with regulators over the sales of auction rate securities are going to put yet another dent in profits (or losses, as the case may be). Yesterday, Wachovia lowered its estimated loss for the third quarter to $9.1 billion from $8.9 billion due to increased costs from its ARS exposure.

Merrill Lynch, UBS, and Citigroup have already agreed to buy back $36 billion of the illiquid securities from its clients. Morgan Stanley, J.P. Morgan, and Wachovia are expected to settle.

And then there's Goldman. Seemingly untouchable, Goldman Sachs has its own set of concerns as the credit crisis turns one. Oppenheimer analyst Meredith Whitney lowered her estimates for the bank's third quarter not because of the tough mortgage market or auction-related securities, but because of the effects of the turmoil on the rest of the banking industry.

"The primary drivers for these revisions are customer volumes, overall weak global equity markets, and weak advisory and underwriting revenues," Whitney wrote.

Deutsche Bank analyst Mike Mayo downgraded his rating on Goldman today due to its high exposure to the weak global equities markets.

The result of all this bad news is a sharp downturn in stocks across the financial sector today. Many pundits declared the bottom for these shares on July 15, the middle of what's shaping up to be the worst month yet.

Perhaps it was. But who knows what September will bring?