“This has sort of opened up the piggy bank,” says veteran banking analyst Nancy Bush of NAB Research. “This $13 billion without JPMorgan getting much for it will embolden the DOJ and pretty much everyone else, including the plaintiff’s lawyers, to go back and make another circle and say, ‘There is more to be had here.'”

It remains unclear what exactly JPMorgan (JPM) did that was so illegal to warrant such a hefty fine from the government. But from all the chatter on the Street it appears that the bank misrepresented the quality of the loans it used in constructing mortgage-backed securities during the boom years. Those securities were later sold to investors and passed off to the government as being nearly risk-free when indeed they were quite toxic.

How exactly the bank fooled the government or why remains a mystery. Indeed, the vast majority of the wrongdoing may not have even been committed by JPMorgan personnel, but by those working at Bear Stearns, which JPMorgan ironically acquired in March of 2008 at the behest of the government, according to a person close to the matter.

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The current head of the Department of Justice, Eric Holder, and his staff, apparently are looking to use the JPMorgan settlement as a template in a crusade against other financial institutions, which may have engaged in similar tactics during that time, according to a person with knowledge of the thinking inside the DOJ. In settling for such a massive amount and forgoing a formal trial, JPMorgan not only has put the rest of the banking industry at risk of further government attacks, it has also effectively raised the bar in terms of potential fines from the big banks.

Apparently, any money the banks may have made under false pretenses going back as far as 10 years ago seems to be at play here. JPMorgan wasn’t the only player in the MBS market during those years. Indeed, along with the two banks it acquired during the meltdown, Bear Stearns and Washington Mutual, JPMorgan had plenty of competition, including, but not limited to, the likes of Bank of America (BAC), the Royal Bank of Scotland, Barclays (BCS), Wells Fargo (WFC), UBS, Credit Suisse (CS), and Goldman Sachs (GS). They all packaged loans into mortgage-backed securities that eventually blew up. They sold these to their own investors as well as to the government and back and forth amongst themselves.

But when the music stopped in late 2007, some banks got caught holding more of the toxic stuff than others. Two of the banks that managed to come out relatively unscathed in the MBS disaster were JPMorgan and Goldman Sachs. In the months following the crisis, the government and the media showered the two banks with praise for avoiding much of the toxic securities that brought down their rivals.

It now appears that the “smarter” the bank and its chief executive, the more it may have engaged in wrongdoing. Indeed, Goldman found itself in the center of a government storm not too long ago for conspiring with a hedge fund to create investment vehicles stuffed with crappy MBS, which it then sold to its own clients. Goldman ended up paying a $550 million fine over the affair, which, at the time, seemed like an insanely high figure for getting caught doing wrong on Wall Street. The level of deviousness on Goldman’s part was apparently beyond the pale for the government. That could mean that there is much more meat on the bone for federal prosecutors as well as for plaintiffs lawyers seeking civil damages in connection to other shady deals Goldman engineered during the boom days.

But the banks that should definitely be worried at this point are the ones already caught in the government’s crosshairs: Bank of America and Wells Fargo. In August, the government accused BofA of civil fraud for failing to disclose risks in relation to $850 million worth of MBS it sold in 2008. The lawsuit is being launched on behalf of investors, who the government claims lost more than $100 million.

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If the DOJ sinks its teeth into BofA the same way it has on JPMorgan, there could be some serious bloodletting. After all, this isn’t just BofA we are talking about here, but also the mortgage lenders and banks it acquired during the meltdown, most notably Countrywide and Merrill Lynch. Both firms basically collapsed because of their involvement in the mortgage mess; Countrywide was the poster child of the shady mortgage lenders, and Merrill was considered an MBS-trading kingpin. In all, BofA and its bad stepchildren sold some $57 billion worth of questionable securities to the government. That’s nearly twice the $33 billion JPMorgan apparently sold the government. Just based on those numbers it isn’t hard to figure out that BofA may be in far deeper trouble than JPMorgan.

Wells Fargo appears to be in a similar pickle with the government. Federal prosecutors in New York have accused the bank of knowingly misrepresenting the quality of the mortgages it underwrote during the boom in order to get federal housing insurance. But instead of rolling over like JPMorgan, Wells Fargo has for the past two years fought the government’s case claiming it did nothing wrong. Earlier this month a judge rejected an attempt by Wells to get the lawsuit dismissed, setting the stage for a nasty court fight.

Some may believe that JPMorgan and its chief executive, Jamie Dimon, did the smart thing by not fighting and by settling with the government out of court. It can be exhausting fighting the government day after day. But JPMorgan’s refusal to fight here slaps a big guilty sign on the rest of the industry and places a target right on their backsides. JPMorgan may think it has saved itself a lot of pain here, but in reality it may have set off a chain of events that could see another wave of big bank failures.