A check was drawn on First National Bank and made payable to Howard. It came into the

Question:

A check was drawn on First National Bank and made payable to Howard. It came into the possession of Carson, who forged Howard’s indorsement and cashed it at Merchant’s Bank. Merchant’s Bank then indorsed it and collected payment from First National. Assuming that Carson is nowhere to be found, who bears the loss caused by Carson’s forgery?