I too have a huge investment with ETrade. Virtually all I have. Right now I still have over 600k in the brokerage, just barely over 100k in the bank. 250k in iras.
These problems started back in August with "phase 1" of the credit crunch, and ETrade took a big hit then. At that time I had something like 300k in their complete savings account. I moved a bunch of the cash from the bank to the brokerage and bought some brokerage CDs instead (each FDIC insured to 100k - as long as you are only holding 100k in each individual bank). That brought my total holdings in ETrade bank to less than 100k. It has since grown over 100k, so today I moved another chunk of money to Emigrant direct to get back below 100k in the bank.
I was unnerved enough in Aug to look into this a bit. From what I've been able to glean, and learn from the NetBank collapse (I was not involved with NetBank, but the case is illustrative in case the worst comes to pass for Etrade):
For the bank: Deposits are insured to 100k for an individual account. 200k for a joint account. If you happen to have both an individual and joint account, 200k per person (100k each for the individual accounts, and 100K of the 200k held jointly). When NetBank fell, FDIC issued a notice on Friday afternoon, and the funds were available through ING immediately (up to FDIC insurance limits). The statement said that amounts above the FDIC insurance would become part of the following proceedings (with an average return of like 60-75% of the above FDIC monies...)
SIPC: protects missing securities - up to 500k (including 100k for cash). The key here is that the brokerage does not own your securities, you do. Only in the case of fraud would this even be an issue. For instance, lets assume you have 1200k worth of securities, and ETrade fails. Scwhab takes over the accounts, you log on to your new Schwab account, and 300k worth of stocks you owned are not there. SIPC will replace those - up to the 500k. But the 500k starts after all assets are transferred - its not your total account value. So I really think there is very little to worry about here. Plus ETrade has significant additional insurance above the SIPC limits - after all assets are transferred.
So in my case I'm not too worried about the brokerage part of the equation - but would seriously consider getting the bank side of the equation <100k. But do make sure you keep (or download) your latest statements in case you have to prove what securites/money you had...
For what its worth.