The financial crisis crystallized the realities of systemic risk -- the idea that in certain panic-stricken environments, no company reliant on functioning credit markets is safe, even if it is fundamentally sound on its own merits.

No company may have been hurt more by guilt-by-association during the market's meltdown than Goldman Sachs (GS), widely recognized to have been the best positioned investment bank entering the fall of 2008. As Bear Stearns and Lehman Brothers went under, the competitive landscape was theoretically clear for Goldman to make sizable market share gains. But the same reliance on short-term financing and market fears of potentially hidden risks in the company's assets forced drastic changes.

Goldman joined Morgan Stanley in becoming a bank holding company, transitioning away from the high-leverage investment bank model to gain access to emergency lending facilities created by the Federal Reserve to stabilize credit markets. At the same time, Goldman was also early in raising equity capital from Berkshire Hathaway, effectively gaining the endorsement of Warren Buffett as it bolstered its balance sheet. On that day, Goldman stock traded at $120; it entered this weekend nearly one year later at $175, even as the worst economic macro-environment since the Great Depression continues to unfold.

Some critics of recently reappointed Federal Reserve Chairman Ben Bernanke argue that he was too slow to realize that the financial system was teetering on the brink of collapse during 2008. But Bernanke might have had another, more personal banking issue on his mind at the time, Newsweek reports: his wife Anna's purse was stolen in August 2008, and the thieves used its contents to access the couple's joint checking account.

A court affadavit filed in June shows that 10 people are charged in the fraud, which used the Bernankes' bank account to inflate the value of other accounts that then had money withdrawn from them. The 22-page document identifies a victim known as "B. B.," who had $900 stolen from his account, but another complaint against one of the alleged members of the ring used Ben Bernanke's full name.

August is known as a quiet month for the stock market, as many institutional investors and traders take advantage of the waning summer to go on vacation. Trading volume dries up, and some large price swings can be attributed to the lack of liquidity, but this news about the concentrated nature of trading is truly odd.

According to Reuters, four beaten-up financial companies -- Bank of America (BAC), Citigroup (C), Fannie Mae (FNM), and Freddie Mac (FRE) -- have accounted for upwards of 40 percent of the trading volume on the New York Stock Exchange to begin this week.

Just as speculation about the health of the banking system in the U.S. seems to be quieting down, there's reason to believe that foreign banks -- particularly two Spanish institutions -- are about to go under the microscope, even as the pair snaps up assets in foreign countries.

Banco Santander (STD) and Banco Bilbao (BBV), with a combined market capitalization of $200 billion, must deal with double-digit unemployment in Spain and a bursting property bubble that threatens to wipe out shareholders, according to a research report from Variant Perception (via FT Alphaville). These two are also working on integrating disparate acquisitions.

The following is a round-up of some of the companies making major headlines today:

Office products retailer Staples (SPLS) announced that second quarter earnings were $0.16 cents per share, excluding a one-time charge. That number was in-line with analyst estimates. Revenues of $5.5 billion were slightly below expectations.

Lowe's (LOW) is bringing its home improvement concept to Australia, teaming with Woolworths in a joint venture that expects to open its first stores in 2011. The Australian housing market is healthy, unlike its U.S. counterpart, and home improvement spending is still growing.

Step aside, John Paulson -- there's competition for reaping billions from bets on the financial sector, and it comes from Uncle Sam. The government, which owns 34 percent of Citigroup (C) following a conversion of preferred stock from the TARP and asset guarantee agreement, has booked an $11 billion paper profit as shares have risen to $4.85 in trading today from the original $3.25 conversion price. The conversion was meant to bolster Citigroup's Tangible Common Equity, or TCE, a new measure being used to determine a bank's ability to absorb losses.

The rebound in Citigroup shares, which fell to under $1 at the height of market distress, is part of a rally in financial stocks as confidence in the sector has been restored. Citigroup has received $45 billion in TARP capital from the government, in addition to a loss-sharing deal reached on a pool of assets in excess of $300 billion.

The parent company of the Philadelphia Inquirer, the Philadelphia Daily News, and the related Philly.com website could emerge from bankruptcy debt-free, if a proposal submitted by the ownership group that bought the paper in 2006 is accepted by lenders in court. Bruce Toll, of homebuilder Toll Bros. (TOL) fame, and public relations executive Brian Tierney are leading a bid to buy out the more than $300 million the company owes for 20 cents on the dollar in cash and real estate.

As the newspaper business continues to reel from a combination of high fixed costs and falling advertising revenue, established papers across the country have been going bankrupt or seeking help from wealthy local citizens. The Boston Globe, which the New York Times Co. (NYT) owns but is actively shopping for sale, has seen interest from at least two local groups, as well as one private equity fund. Even though such newspaper sales have not worked out well in the past, there is hope that re-making the Inquirer as a debt-free company will allow it to be marginally profitable.

There has been a great deal of talk in the financial media of late about bank's loan values, which may be vastly overinflated due to flexibility offered by accounting rules. The SEC revealed that it sent a memo to a number of CFOs at banks, telling them, "Clear and transparent disclosure about how you account for your provision and allowance for loan losses has always been critically important," and "although determining your allowance for loan losses requires you to exercise judgment, it would be inconsistent with generally accepted accounting principles if you were to delay recognizing credit losses." (Hat tip, Zero Hedge).

Clearly, there is concern that many banks are not taking the appropriate marks on their loan portfolios. Last week, DailyFinance discussed the next hundred-billion-plus-dollar question for the banking system: whether or not the enormous gap between some banks' book values and market values was a cause for concern. One curious development since then has been the Financial Times' revelation that Citigroup CFO Ned Kelly was forced out by U.S. regulators shortly before reporting second quarter results.

As the S&P 500 ($INX) flirts with highs last seen in October 2008, the credit markets have been on edge, and the perceived risk of default is risen to its highest levels in a month -- a time when the S&P was 50 points lower. Since reaching a low point the first week of August, the cost of insuring against default on a basket of investment grade-rated debt has risen 15 percent, and the same measure for lower-rated "high-yield" or "junk" credits jumped 16 percent, according to data from Markit CDX indices. Similar indices tracking subprime mortgage-backed securities and commercial MBS have also fallen sharply in the last few weeks.

The conflicting signals -- either the stock market or bond market must be wrong -- are a sign that the massive rally in equities could be drawing to a close. The bond market is traditionally viewed as the more prescient forward indicator, and as credit investors show more risk-aversion (Treasury yields have also dropped in the last week) while stock investors bullishly march on, the odds of a negative shock jump. What stocks are most at risk?

The U.S. economy is out of the frying pan and into the fire, Warren Buffett writes in an op-ed piece in the New York Times today. The very actions that saved the financial system from the brink of ruin now threaten the long-term health of the dollar.

"The United States economy is now out of the emergency room and appears to be on a slow path to recovery," Buffett wrote. But rescuing banks and the unregulated "shadow banking system" comes at a high cost, and will result in a budget deficit of $1.8 trillion this year, or 13 percent of gross domestic product. Excluding World War II, this is more than twice as high as anytime since 1920.