With a $4.7 trillion [3] dollar bailout under their belts with no harm done to their billion-dollar bonuses, don't expect Wall Street bankers to be chastened by the 2008 financial crisis. Below we list eight things to watch out for in 2011 that threaten to rock the financial system and undermine any recovery.

1. The Demise of Bank of America

Wikileaks [4] founder Julian Assange [5] is promising to unleash a cache of secret documents from the troubled Bank of America [6] (BofA). BofA is already under the gun, defending itself from multiple lawsuits demanding that the bank buy back billions worth of toxic mortgages it peddled to investors. The firm is also at the heart of robo-signing scandal, having wrongfully kicked many American families to the curb. If Assange has emails showing that Countrywide or BofA knew they were recklessly abandoning underwriting standards and/or peddling toxic dreck to investors, the damage to the firm could be irreparable.

2. Robo-signers Wreaking Havoc

With lawsuits abounding, new types of fraud in the foreclosure process are being uncovered daily, including accounting fraud, fake attorneys, destroyed promissory notes and false notarizations. The crisis not only calls into question the legality of untold foreclosures, it also calls into question the value of trillions of dollars worth of mortgage-backed securities held by banks, pension funds, federal, state and local governments. The only government report on the topic by the feisty Congressional Oversight Panel for the TARP [7] acknowledges that "it is possible that 'robo-signing' may have concealed deeper problems in the mortgage market that could potentially threaten financial stability."

3. MERS Madness

In addition to outright fraud, numerous state Supreme Courts have questioned the legal standing of the Mortgage Electronic Registration [8] or "MERS" system. MERS is listed as the mortgagee for 60 percent of U.S. mortgages. MERS is an electronic clearinghouse created by industry to bypass the property registration system developed by our forefathers in precolonial days to ensure that the King could not easily rob the subjects of their land. Wall Street turned to MERS to speed securitizations (and now foreclosures), but its legal standing is now in doubt, and its shoddy processing of documents has major ramifications for the securitization process as well. Look for a rotten "MERS fix" in the new Congress. Let's hope it gives consumer advocates some leverage to demand justice for Americans who are being robbed by the new Kings on Wall Street.

4. Flash Crash Calamity

The "flash crash" of May, 2010 rattled the markets and caused a stunning 700-point drop in the Dow within minutes. Regulators think they know what occurred, but they are moving too slowly to put the brakes on hair-trigger trading. Seventy percent of Wall Street trades take place in milliseconds, so it is no surprise that mini-flash crashes are becoming a constant. With traders now gearing up to trade on raw news feeds and Twitter, we can anticipate even more volatility. A small financial transaction tax targeting high-volume, high-speed trades is long overdue. It would throw sand in the roulette wheel and raise much-needed revenue for the federal government.

5. Bigger Behemoth Banks

The Federal Reserve [9] is planning to "stress test" the big banks again. The same 19 banks that underwent the first stress tests in 2009 will be tested again, but this time the Fed says it won't release the results. Why not? Banks with toxic mortgages and mortgage-backed securities on their books and concomitant legal exposure to "put back" law suits are being kept afloat by accounting tricks, TARP and Fed loans. Honest stress tests of still weak financial institutions may well result in sales and buyouts that will further consolidate the already concentrated banking industry and create larger and more unwieldy "too-big-to-fail" behemoths -- backed by the guarantee of the American taxpayer.

6. Foreclosure Tsunami

Housing foreclosures may top nine million in 2011 and Goldman Sachs [10] predicts the number will reach 12 million in the next few years. The result will be another significant drop in home prices in 2011, and even more families underwater. Civilized nations see the forcible migration of a city the size of New York as an economic and humanitarian catastrophe, but not the United States. The Obama administration and Congress have callously refused to take meaningful action to aid families facing foreclosure, even in the face of widespread predatory lending and rampant foreclosure fraud. The only hope now for millions of American families is aggressive action by the 50 state Attorneys General who are actively investigating the fraud. Whether they have the guts to wrestle a settlement out of the big banks that slows the foreclosure machine and offers families meaningful options has yet to be seen.

7. Bankrupt Cities and States

Meredith Whitney, a research analyst who correctly predicted the credit crunch, is now warning that over 100 American cities could go bust next year. She anticipates billions worth of municipal bond defaults and warns: "next to housing this is the single most important issue in the U.S. and certainly the biggest threat to the U.S. economy." States are also in dire straits. The economic shock of mass unemployment on top of years of population decline, de-industrialization and the like have left cities unable to meet their obligations to taxpayers and retirees. With an austerity anschluss [11] underway in the House, it may take a bankruptcy of a major player to prod an appropriate federal response to this looming disaster.

8. Gas Prices above $4.00

The price of energy and other commodities shifted into high gear in late August when the Federal Reserve Chairman decided to stimulate the economy with quantitative easing. Speculators quickly began bidding up the value of asset classes like crude oil, metals and food commodities. In December, the Commodities Futures Trading Commission failed to apply position limits to these commodities, delaying rules that would crack down on speculators and aid consumers, who are already seeing big price hikes at the pump. Without swift action, skyrocketing gas prices will further tank an already stalled economy.

As we hope for the best in 2011, let's prepare for the worst. The big banks are sure to deliver.