It's a terse, vague press release from FDIC that's got me scared today. (HT: Calculated Risk)

The release — in high bureaucratize — tells us that the nation's banking regulators are working with banks on "capital-restoration plans." Then comes the chilling part:

All institutions are reminded that investments in preferred stock and common stock with readily determinable fair value should be reported as available-for-sale equity security holdings, and that any net unrealized losses on these securities are deducted from regulatory capital.

Let me translate.

They are saying that a bunch of banks have so much Fannie and Freddie stock that they are now in serious trouble. They don't have the basic amount of money needed to run a bank, according to U.S. law and regulation.

The banking regulators want to work with the banks. But they're going to hold them to the rules.