If you thought the derivatives debt game had leveled out in the U.S., and that the worst was over, think again. The bankruptcy of MF Global, a far larger company than Lehman Brothers, has signaled a new resurgence of bank weakness. However, the real danger behind the MF situation is not necessarily its failure, but how it has been hiding its failure.

Not only was MF making risky bets with borrowed money without disclosure, and “window dressing” their quarterly reports to fool investors, but they have also been caught siphoning capital from client accounts to pay off the massive liabilities they have accrued, These kinds of activities are what we usually call “fraud”. But with a company like MF Global, whose reputation was once considered sterling, a much more important and terrifying question arises; how many other banks are doing the same exact thing?

My guess is all of them.