From Time -

“Last Friday Paulson embraced sprinkling banks with billions of dollars, announcing at a press conference that he intended to pursue this plan “to promote financial market stability.” Which leads to an obvious question: Are banks failing now?

The obvious answer is yes. Banks are failing — 13 have gone under so far this year — and they’re going to continue failing. One hedge-fund star said the markets are now pricing the chance of a default in the next five years by Morgan Stanley or Citigroup at 45% and 21%, respectively.

The FDIC has a clear message for Americans who are beginning to awaken to the size of the problem: Don’t panic. Banks will fail, but it is highly unlikely that depositors will lose their money. The FDIC now guarantees up to $250,000 in individual deposits at the banks it insures. And by law it gets its hands on a failed bank’s assets before any other creditors do. FDIC chair Sheila Bair is eager to talk about how no insured depositor has ever lost a penny of his or her deposits”