Actually Ex-SD, the scariest item in that list in #3, but it is also the least understood. Basically, the banking system is technically insolvent. There are solvent banks obviously, but on balance they aren’t. This is why the FDIC is ramping up the number of people they need for coming bank failures..they know..they should know. A bunch of consumer banks failing is not a big deal, but it is when commercial banks fail that we have a big problem and that is namely the lack of credit available for businesses to operate with. Watch what happens to employment when banks don’t want to rollover LOCs or jack up their interest rate and making capital investment too costly for small to medium size businesses. It’s a bitch when the CFO has to decide on whether or not to make the payroll or pay a critical materials vendor. Meanwhile, the customers are 90 days late because their hurting too.

This is the real systemic risk that keeps Bernanke awake at night, not whether a bunch of piddly consumer banks go down. It is the commercial level banking that would really put us in a bind if it goes sour.