Let's juxtapose two stories.  First, from Bloomberg:

Aug. 14 (Bloomberg) -- More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival.

Ok.  Now how about this one?

WASHINGTON (MarketWatch) -- Delinquency rates for loans and leases at U.S. banks increased to a record 6.49% in the second quarter from 5.58% in the first quarter, the Federal Reserve announced Monday.

So let me see if I get this right. 

At 5% of non-performing loans a bank is at risk of being insolvent.

But the entire banking system in The United States had its non-performing loan ratio increase from 5.58% in the first quarter to 6.49% in the second, a record, and higher than the 5% level at which the survival of a bank(ing system) is threatened with collapse.

Hmmmm....  So should we take from this that the entire US Banking System is about to collapse?

This much we know for certain - you're being screwed - systematically - to cover the sins of these banksters who made loans to people who they had no reason to believe could pay:

Being in debt is about to get a lot more expensive for millions of Americans. Credit card issuers have been rushing to raise rates in advance of this Thursday, when the first provisions of the Credit Card Accountability Responsibility and Disclosure Act (CARD) will go into effect, with other protections starting in February 2010.

Right.  Including those who are good credit risks.

This is the problem with allowing the blatant and outrageous fraud in our system to continue: Those who are prudent, who have done only good and not bad things, get reamed repeatedly and are forced, at gunpoint, to pay for the sins of those who committed that fraud.

Yet we, as Americans, permit this.

We absorb 20, 25, 30% interest rates (while the banks borrow at zero) so the bank executives who knowingly granted credit to those who could not pay, then sold worthless securities to investors, do not go to prison for fraud.

We pay more than $30 billion in overdraft charges and allow banks to "shuffle" deposits and withdrawals to generate the maximum in these fines so that the bank executives who are knowingly mis-marking "assets" at higher than their true values can "cover" their sin and do not go to prison for fraud.

We pay the FDIC "assessments" and "loans" from Treasury, as taxpayers and banking customers, so that the FDIC can repay depositors after it absorbs a loss that it should not have incurred - a loss that happened because OTS, OCC and the FDIC failed to close banks in a timely manner that were cooking the books when they either knew or will willfully blind to the control fraud taking place at these institutions.

The Fed says that:

Demand for loans continued to weaken across all major categories except for prime residential mortgages. 

The American people are wising up, but only to a degree.  They are refusing to take on new credit (as they should, seeing as they're being charged not only for their own legitimate level of risk, but also for their next door neighbor who was intentionally given a loan that the bank knew he could not pay) and demanding in some small way that The Bezzle be eradicated. 

The people recognize they're being violated repeatedly by the scam artists on The Beltway and Wall Street, but they're not quite sure how to stop it.  Certainly, hollering at Congress hasn't done any good.  The Fed has refused to enforce consumer protections, as has Treasury, and both have done their damndest to overrule state regulations and even State Attorney Generals whenever possible.

Here's reality folks:

The system still has too much non-performing debt in it, and that percentage is going up, not down. 

It is getting worse, not better.

The only reason we have any "resemblance" of a functioning credit system at all at the present time is that the government and Fed are pumping upwards of $250 billion dollars a quarter - that is, $1 trillion a year - into the system to subsidize bad credit risks and keep those who have been and are getting screwed by these frauds - so long as they're other banks and businesses - from having to bear the cost of these acts.