It almost seems like we are being prepared for bad news. Last Thursday Treasury Secretary Henry Paulson said we need measures in place to allow a large financial institution to fail without producing systemic shocks that could take down other institutions. On Tuesday Federal Reserve Chairman Ben Bernanke and J.P. Morgan Chase President Jamie Dimon echoed the sentiment; later that day Paulson would repeat it.

...technically insolvent, a very nasty word for investors to hear about a financial institution.Today both Bernanke and Paulson appeared before the House Financial Services Committee to ask for better tools to allow for a large financial institution to fail (but at the same time insisted there are no imminent disasters looming and that the beleaguered GSEs Fannie Mae and Freddy Mac are well capitalized).

That being said, former president of the Federal Reserve Bank of St. Louis William Poole says it is increasingly likely that Fannie and Freddy will need a bail out. Fannie and Freddie account for about three-quarters of new home loans in the United States and, according to Mr. Poole, Freddie is technically insolvent, a very nasty word for investors to hear about a financial institution. Click to see charts for Fannie and Freddie.
[FT.com, Wikipedia, Stockcharts]