But she was quick to say that the banking system as a whole "is solvent." My question would have been to ask how many individual banks are not solvent. During the Depression of the 1930's, 25% of banks went bankrupt and while the number today may not be as high, the vast majority of banking activity takes place in a handful of very large institutions. For all practical purposes Citigroup is dead. Bank of America committed suicide by purchasing Merrill, and while that couyld be unwound it is still a huge negative for the banking industry.
How much more deleveraging needs to take place before we can see recovery? I have no idea, but I'm not sure anyone else really knows.