Ruh Roh!

Boy, this is bad news for the economy.

Read the whole article, but the basic point is that this whole CDO/SIV mortgage fiasco has not shaken out yet. Banks want money back that they leant to investors. This means investors will be forced to sell assets to create liquidity necessary to repay banks. This creates downward pressure in the markets that those investors are in by forcing more supply into those markets. This in turn reduces the value of those investments in other companies portfolios. Which makes banks MORE nervous... Negative feedback loop.

The upshot of all this is that there will be more financial turmoil before this gets better. There may even need to be a major banking shutdown/audit although that would be pretty drastic. More likely would be: more major write downs of CDO holdings, a federal bailout of Sallie Mae/Freddie Mac, plus some significant consolidation in the banking industry as the sounder banks buy off the assets or stock of the banks with the most exposure that wind up cratering.

UPDATE: More bad news here. When the article refers to "margin calls" this is what they're talking about. They were lent money to invest more in mortgages/mortgage backed securities (thus they are investing "on the margin" i.e. with borrowed money). Now the bank says they are calling in those loans because the business is no longer a good credit risk because the value of their assets are falling. But they don't have the money to pay the bank back, and they can't sell their assets to cover the loan thus "have raised substantial doubt about the company's ability to continue as a going concern." In other words they're going out of business.