With that kind of money and with the speed at which deposits clear now, there is no way these banks are victims. They had to have had employees that looked the other way and/or were hoping the other bank would loose. I'd bet they had loans to loose as well.
Check out the Indy Star article, it details exactly how this guy got away with it. Also, the check-kiting was going on in 2001, well before the new Check-21 rules were put in place that speeded up the process.