The banking system may not survive this housing crash. Hmmm.. wonder why Bernanke panicked and cut 1/2 point now?

When the banks start failing left and right, and the US Taxpayer has to pay out wayyyy beyond their FDIC insurance levels, HP'ers shouldn't be surprised. It hath been foretold.

From last week's hearings on Moody's and S&P's incompetence in letting the toxic loan CDO/SIV problem grow out of control:

At a Congressional hearing yesterday on the malfeasance of ratings agencies, like Standard and Poor's, in hyping the mortgage securities bubble, Rep. Paul Kanjorski (D-PA) repeatedly noted that the mortgage securities blowout is now a "systemic financial crisis." It threatens American banks with failure like that of Britain's Northern Rock and other European banks, Kanjorsky implied in a colloquy with witness Prof. Joseph Mason of Drexel University.

"You say that 10% of U.S. bank assets are based on structured investment vehicles (SIVs), specifically several trillion dollars in CDOs; can these banks survive the collapse of these CDOs? Do they have the capital base to survive that?"

Mason answered, "No, and the FDIC does not have the resources to handle that event either."