You definitively either work at CNBC or watch too much CNBC.
I think there is still a chance, albeit getting smaller as time goes on, that the Fed will be able to sell treasuries to mop up the excess reserves.
Treasuries are only selling now because the Fed is buying some (POMO) and people are frontrunning the Federal Reserve who has guaranteed another big intervention in the future. But this is a short time trade, very profitable but short term. Once the Fed has done its second big intervention the game is over. If the Fed does not support the Treasury then the interests that it will have to pay for the debt will be mean default for the government. In this scenario do you really think the Fed will stop buying treasuries, and even start selling them? And even if it did so, how much is the Fed going to get from a junk government bond?
It does appear that the banks still have quite a way to go with the new worries about credit unions. Until confidence returns, the liquidity is necessary to keep the economy moving. As certainty in the US's economic future returns, US investment should increase, and allow the Fed to act in kind to remove the excess reserves.
What good does JPM, GS or CityGroup do to the economy? They are horrible capital allocators as proven by the crisis. You dont want to get this economy artificially alive. You want the bad companies to go under, so new and efficient ones can prosper. You have to think that the USA was living a bubbled economy not a sustainable one. Returning to a bubbled economy is not the objective.
By saving the banks and trying to save all the zombie companies (f.e.: GM) the government has turned what could have been a one-two year recession into a long depression.