The banks are caught (not defending it, but pointing it out). If they start selling the houses, they will fail. If they leave them sit empty, the houses loose even more value and the rest of the neighborhood falls also.
That is why we are seeing things like MF Global not get prosecuted. The banksters have gone to their friends, the politicians, and explained that if the law starts getting enforced, they both will fall. One because most of what is on the balance sheet is gone, and the other because the voters will start demanding to know why they let it happen.
Let - the - banks - fail. It is called capitalism.