You have to wonder WHY would they do this now? I've always thought this is the path to nationalization. If they are honest, and we know that won't happen, then a majority of the banks are probably insolvent. I hadn't thought about your point, but it does make sense. Sort of the sacrificial lamb. Now if the "one" is Citi or BofA, what then?
My gut feeling tells me that Citi or BofA will be declared to be fine. An inconsequential player (I don't know the full list) will take the fall.
Some small banks will need more capital. Citi and BofA are rolling in extra cash according to Geithner.