And I don't think Google should do this either. But I don't think they do.
In fact, in the example cited here, I'm sure the banking applications were marked in the market as being from "Droid09", not Bank of America, etc. The Market does require applications to be signed by their developer.
Apparently, many people decided to trust Droid09, who may be an honest, though relatively unknown, developer.
Google may get more mileage out of "vetting" their developers than manually reviewing each application. Many of us have had to go through some identity verification for accepting credit cards or getting a secure certificate. Would hackers be motivated to steal data if they can be quickly traced and jailed?
If it comes to having a few months for a manual review process by Google before your application shows up in the market, that is unacceptable. Yes, I know IPhone does that and still has a large number of apps, but you hope that with some competition there is some variety as well.