Minyanville had some good topical commentary on SIVs. The recent creation of a Super-SIV fund, backed by banks and coordinated by the Fed, is effectively a bailout of Citi. Peering ahead like a sloth caught in the headlights, Citi was facing a situation with their SIVs that had the potential to sink the entire firm; which would cause a confidence crisis across all investment banks. This drove the creation of the Master Liquidity Enhancement Conduit in an attempt to calm the waters. Another unmentioned concern is that the financial engineering in the banking system is not merely limited to the SIVs associated with commercial paper, any sector of the leveraged derivative market has the potential to be a poorly constructed house of cards which can come crashing down in a matter of weeks.
The Problem with SIVs
Due to years and years of increased leverage we effectively have a banking system that is not functioning.
http://www.minyanville.com/articles/C/index/a/14597/from/yahoo
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