With the biggest three players - UBS, Citi and Merrill Lynch - already given in, the other banks involved in the auction-rate securities misselling business are hastening to follow; the FT reports that JP Morgan and Morgan Stanley are close to an agreement which would see them buy back around $10bn in ARS at par. Wachovia is still holding out against a repurchase deal - perhaps because its financial position is rather weaker, as MarketWatch suggests:

... "This company's mantra was grow, grow, grow," Gerard Cassidy, an analyst at RBC Capital Markets, said in an interview. "They were so focused on wanting to be in the trillion-dollar asset club for banks that they cut corners."
Until now, most analysts and investors have focused on Wachovia's $122 billion portfolio of so-called pick-a-pay mortgages, inherited from the infamous acquisition of lender Golden West at the height of the housing boom in 2006. These kinds of negative-amortization mortgages allowed borrowers to pay less than the required monthly amount, increasing the size of the loan. As house prices slump, more of these home loans are souring.
But Wachovia also has more than $200 billion in commercial loans that could trigger even more losses if the U.S. economy slides into recession, according to Cassidy.
"This is more frightening to me because it's bigger," he said...

An optimist would say "Ah, well, these banks will have learned their lesson now - next time they will be more wary of stretching the truth about the securities they sell!"

No, they won't. Once we're through this downturn, exactly the same sort of thing will happen again. The central problem is that there are endless classes of securities which appear safe and liquid during good times, but then dry up or explode when the economy slows down. And, given the incentives that banks and their employees operate under, they will sell these securities as fast as possible when times are good, and hope to be out from under by the time the downturn comes - if, indeed, they even look that far ahead. Incentives matter, and the only way to change this behaviour is to change - by regulatory force if necessary - the incentive structure of the banking industry, so that both banks' and individual employees' incomes depend on performance over the long term, not simply over a quarter.

But, you know, don't hold your breath on that one.