The insolvency of the general population - or rather a 'solvency' dependent purely upon inflated property prices - is a much greater problem than the related problem of the insolvency of the intermediary banks.

As Michael Hudson points out, 90% of the population are in debt to the other 10% who own substantially all the unencumbered productive assets.  

And again, as he points out as an economic historian, there is nothing new about this: it's what always happens when compounding debt combines with private property in land, and is why debt relief such as Jubilees has been necessary, and is once again.

"The future is already here -- it's just not very evenly distributed" William Gibson