The FDIC is planning to auction off some the assets that it has accumulated, and that has the banks worried that this will force many of them into insolvency, because it will set a market price for the sh%$ that is on their books:

A Federal Deposit Insurance Corp. plan to auction more than $1 billion in assets seized from failed banks next month, including a loan to build a W Hotel in Atlanta, may trigger writedowns that weaken lenders nationwide.

Almost half of the loans were originated by Silverton Bank N.A., whose collapse last May was the biggest in Georgia history. Community banks that joined Silverton in providing $80 million for the 237-room hotel and condominium complex, as well as backing for 39 other projects, could be forced to write down their stakes to reflect sale prices.

What is going on here is that because the FDIC will be auctioning off assets, as it is required to do by law, these illiquid assets, and this will assign a fair market value to said assets.

Banks and other institutions who have maintained the illusion of solvency by using some variant of mark to myth model will therefore have to reassess the value of these assets on their books, pushing some, perhaps many, of these institutions into bankruptcy.