Key Lessons From the Financial Meltdown

key lesson from the meltdown “was that liquidity is critical to financial institutions,

This line was taken from the article in Wharton Knowledge that seems make a case for the obvious.  I think we were well aware of the issues that could occur when banks and brokers are allowed to leverage themselves 9 to 1.

The article goes on further to state that the the stress tests were a major factor in  stabilizing the banking system.  Ruth Porat, soon to be new CFO at Morgan Stanly has the similar line to all the banks and politicians that want to prop up the banks at the expense of the tax payer. Porat seems to think that the financial institutions are solvent with capital reserves adequate enough to cover the increasing defaults and foreclosures. 
Liquidity, Interest Rates and Banking (Financial Institutions and Services)
The more likely truth is that the banks are not solvent and as defaults continue to grow the hold and hope for recovery option no longer applies.  The recent video here on CNBC references the shadow inventory, or inventory yet to come on the market from defaults, to be nearly twice what we are seeing now.  The number of foreclosures this year was 4 million, the claim was made on the network that there it is possible some 7 plus million defaults are yet to hit the books of the banks.  The cost of holding and managing these defaults is astronomical and could pull anyone of the "too big to fail" banks under.

Risk and Liquidity (Clarendon Lectures in Finance)