Recent quotes“That sound you hear is the FDIC upping its troubled institutions list,” said one senior banking executive

“That sound you hear is the FDIC upping its troubled institutions list,” said one senior banking executive.

Citing “deep concerns” about the Treasury’s program to guarantee money market mutual funds, American Bankers Association president Edward Yingling said that the bailout of money markets “will undermine the role of banks during this current crisis and has the potential to have an extremely negative impact in the future.”

Don't take your eye off the UK... they are in as big, or bigger, trouble as the US:
Lloyds TSB has agreed a £12bn emergency takeover of Halifax Bank of Scotland in a deal that could lead to 40,000 job cuts.

So how to mark the end of an epoch? In 1976, Jim Callaghan was the undertaker for the post-war social democratic order when he said: "We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that option no longer exists." On Tuesday, the prime minister should stand up and say: "We used to think you could borrow your way out of a recession and increase employment by increasing debt and setting the City free. I tell you in all candour that option no longer exists".

Former Senator Phil Gramm, who now advises Senator John McCain and is the person who says that folks who fret about current economic conditions are “whiners”; Clinton Treasury Secretary Robert Rubin, one of whose protégés advises Senator Barack Obama; and Alan Greenspan, former chief of the Federal Reserve.
Gramm, Rubin, and Greenspan made this debacle possible.

Against this backdrop, if the government had rescued Lehman, it would have repudiated the claim that the Bear rescue was extraordinary; it would have also conceded that in the six months since Bear failed, neither the new facility that it set up nor the other steps to make markets more robust were reliable. Essentially, the Fed and the Treasury would have been admitting that they had lied or were incompetent in stabilizing the financial system — or both.

The last 10 days have been the most remarkable period of government intervention into the financial system since the Great Depression.
Excellent summary of what just happened.
http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-the-recent-financial-upheavals/?em

The blue ribbon for "Unexpected Superb Analysis Of The Month" goes to Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids who correctly surmises: "It sounds like there's going to be a giant dumpster for illiquid assets."