Incredible. The Federal Reserve's Inspector General (it's top auditor-cop) is at a complete loss to account for some important, and very basic information. In this clip the Inspector General can't account for the whereabouts of some $9 trillion (with a "t") that has been encumbered (spent, lent, credited, or guaranteed) by the Federal Reserve over the past year.
As Congressman Grayson points out, in real numbers if we have $9 trillion that's unaccounted for that means you and I are on the hook for about another $30,000 each (i.e. in addition to the $40,000 we owe for our "regular" national debt).
It's this kind of ignorance and stupidity that has enabled a Wall Street bailout culture that is now being matched by proposed accounting rule changes that are largely toothless. Worse, these accounting rule changes amount to little more than favorable legislation for the market players who got us into this mess. In simple terms, these new accounting rules allow financial institutions to reprice formerly toxic instruments so that toxic asset "market losses" can be rebooked - for credit purposes - as healthy instruments.
Think about it this way (fair warning, this is oversimplified). If your neighbor is being foreclosed on, their mortgage is realistically a toxic asset (since it won't be paid). However, the bank that is holding the mortgage might actually have a "healthy" asset because the Federal Reserve (and TARP & TALF) has guaranteed or "insured" it for the bank. So, on the books - and for accounting purposes - it looks like the bank will get paid because of it's newly insured asset.
And just like that, we have a healthy asset that can be used for guaranteed loans and credits.
The only problem is that consumer credit is collapsing while your neighbor still loses their home (in addition to seeing their credit score wrecked for a generation). Families may be ruined in the process. Chances are your neighborhood will not fare well either as housing prices continue on their downward trend.
This, in a nutshell, explains why Wall Street is happy (stock rally) and why Main Street is skeptical (consumer polls). The federal government - i.e. you and me - is guaranteeing Wall Street's survival.