The Fed and the ECB Support 50% of the Equation
In a joint announcement, The Federal Reserve and the ECB basically announced the "massive force" measure needed to protect liquidity problems striking European banks. 3 month liquidity, all at one price, for basically as much as you need, is their offer. More than the largest, well-known stories, Societe Generale and BNP, this helps those that have no other alternative sources of liquidity.
Now For the Hard Part
The question, of course, is solvency. The question is still bank balance sheets, and what losses can be taken, if moved from unrealized to realized. This presumes that not all unrealized losses are properly marked to market, which is almost certainly a problem.
Until Then, It's Safe
Don't fight the Fed, etc: apply all of the rules here. Get outta the way, ride the longs, which mean: DB, CS, ING, STD if you must. These are swings, but for now, it will be fine. XLF? No, except that shorts will have to cover but that will be secondary to the European bank ADRs mentioned here.
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