By hundreds you mean thousands. Bank of America alone has over 1000 branches.  These aren't just mom and pop banks.

And you realize that all of those banks owed each other money right? If all of them go into bankruptcy, who is going to pay who when none of them actually have any assets?  Bankruptcy works fine for one company.  But when an entire sector of the economy goes into bankruptcy, particularly the banking industry, that is what we call an economic catastrophe.

And as I said before, the government is on the hook for that money anyways based on FDIC insurance and all kinds of other investor insurance programs.

I don't think you will find any rational person on the planet who would tell you that otherwise equal economic recessions will remain the same when there is a systematic bank failure in one and only a few banks failing in the other.

Lehman Brothers was the largest bankruptcy in history, by a healthy margin.  Without adjusting for inflation, Lehman Brothers had 4x more assets than were lost because of bank failures during almost the entire Great Depression. The stock market collapsed when this firm alone went under. 

And it wasn't even that large compared to a lot of these banks, many of which had over a trillion in assets.  Do you honestly believe that the economy wouldn't have suffered more if even 2 or 3 of those trillion+ banks would have gone into bankruptcy?

Great Depression Losses:

http://www.livinghistoryfarm.org/farminginthe30s/money_08.html

As the economic depression deepened in the early 30s, and as farmers had less and less money to spend in town, banks began to fail at alarming rates. During the 20s, there was an average of 70 banks failing each year nationally. After the crash during the first 10 months of 1930, 744 banks failed – 10 times as many. In all, 9,000 banks failed during the decade of the 30s. By 1933, depositors saw $140 billion disappear through bank failures.

http://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States

Largest bankruptcy

The largest bankruptcy in U.S. history occurred on September 15, 2008, when Lehman Brothers Holdings Inc. filed for Chapter 11 protection with more than USD$639 billion in assets.^[44]

The 20 largest corporate bankruptcies are as follows:^[45]

Another big bank probably going bankrupt despite receiving $2.33 billion from the government:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOcXMiFm91vw

http://en.wikipedia.org/wiki/Bank_of_America

Bank of America assets: Total assets ▲ US$2.88 trillion (Sep '08)^[3]

This bank has close to 5x what Lehman Brothers did.  I am sure the economy could have just shrugged it off if Bank of America would have gone into bankruptcy.

At least CIT Group is relatively small.  It is a fraction of the size of Lehman Brothers.  CIT has somewhere around $50-$70 billion in assets.  GM's bankruptcy was a bigger deal than CIT Group's would be.

http://en.wikipedia.org/wiki/CIT_Group

I kind of have to wonder about how many people are being mislead by the spin that is being put on employment numbers rather than understanding the reality of the situation ... The spin is (essentially) that things are getting worse for people at a slightly slower rate which must mean that things are getting better.

How anyone can think that unemployment is bottoming at a time when continuing claims on unemployment benefits have reached an all time high (since the statistic was measured in 1967), where first time claims are over 500,000 per week, and the only reason the unemployment rate is growing at a slower rate is because people have given up on the possibility of finding a job?

In the past few months there has been a lot of focus from the mainstream media on the "green shoots", which are essentially a bunch of indicators which remotely point at a recovery when not interpreted in context.

A lot of the bad information gets little attention or is outright ignored.

One of the indicators is consumer confidence, which gets a lot affected by the media's reporting of economic news. So there has been a self-reinforcing loop of good indicators in the past few months, but all of that can get reversed with a single month of contrary data. June's unemployment numbers were already bigger than expected by the "green shoots" crowd, and expectations are going down again.

All time high in actual numbers, not as a percentage.  The country's population has grown a lot since this data started being measured, so your point really isn't relevant.

And the reason why it is important that jobs are being lost at a slower pace is because that is how economic trends typically work.  As NJ5 was pointing out, things just don't change overnight.  It took people about six months to a year to even figure out we were even in a recession in the first place.

akuma587 just one thing... Don't pay that much attention to those who say employment is a lagging indicator. This is a consumer-led and credit recession, where lower consumer appetite and people's/businesses' inability to pay their debt results in most of the problems, not just a recession generated by too much inventory which requires an adjustment in manufacturing capacity (i.e. the most typical kind of recession).

The full impact of the huge amount of unemployed people this year hasn't been felt yet. These people have only recently reduced their spending and many of them are just now getting into trouble with their mortgages and other debt.

One thing you don't seem to get is that the slower pace is not  significant ...

If we were talking about the economy losing jobs at 1/4 or 1/2 of the peak rate you might be able to make the claim that there has been a significant improvement in the economy and 6 months down the road the economy will start creating jobs at a faster rate than it is losing jobs. When you are talking about the economy bleeding jobs at 90% of the peak rate its kind of hard to argue that the economy has improved as much as companies have run out of "low lying branches" to cut and are being more selective with their layoffs.

When you factor in people who are asked to take pay cuts, asked to work fewer hours, or taken part time jobs to get some reliable income into the mix (who are all hurting but don't show up in the main unemployment statistics) its hard to look at the economy bleeding 550,000 jobs in a month rather than 600,000 as being a huge improvement.

I don't have to pay attention to people to know that employment is a lagging indicator because historically it has always been a lagging indicator.

Everything you are saying is true, but what you are talking about has already been going on for the last year or so.  I've been hearing people talk about the credit crunch since early 2008.  Its not like you have unearthed something people didn't already know about.  Why do you think the Democrats were so gung-ho about passing that credit card reform bill a few months ago?  Because everybody was worried about exactly what you are talking about.  Why do you think the Democrats allocated money (at the beginning of the year mind you) in the stimulus to allow states to extend unemployment benefits?  Because everybody was worried about exactly what you are talking about.  I mean frankly you are kind of late to the party on this one. 

That's not even getting into the massive amounts of money and programs out there to help people refinance mortgages, people taking advantage of it on their own through directly with banks, people taking advantages of private avenues to manage their debt, etc.  This stuff happens all the time even in GOOD economic times.

@ HappySqurriel:

So you are saying a slowing pace isn't significant at all.  I agree that it can be given too much significance, but that doesn't mean it has no significance.  If unemployment is increasing at 1% every month but then after a few months starts increasing by only .2%, are you saying that has no significance whatsoever in terms of when unemployment will start dropping? 

I mean these aren't really abstract, complicated models we are talking about here.  Its just looking at rates of change on graphs.  You will be hard-pressed to find periods of high unemployment where this phenomenon didn't happen even though you claim it has no significance.  And I would love for you to show me some.

And the rest of what you are talking about always happens when there is high unemployment.  No one is claiming that unemployment numbers reflect the whole picture.  But this isn't the first time we have had high employment numbers, so I don't really think you can claim nothing like what is happening now has happened before.