More good reading for insomniacs. Found this one back in '08 when the fit hit the shan ala QE I....

http://www.scribd.com/doc/52222836/Securitization-is-Illegal

GAAP & FASB allows for a lot of off-balance sheet shinanigans with instances of outright fraud, deceit & collusion detailed in this paper.

Bottom of pg. 22--

"Securitization undermines US federal bankruptcy policy, because it is used (in lieu of secured financing) as a means of avoiding certain bankruptcy-law restrictions - the origins of securitization in the US can be traced directly to efforts by banks and financial institutions to avoid bankruptcy law restrictions.... In most cases, Insolvency often occurs before management decides to file for bankruptcy."

Zombies.

The counterparties, politicians, SEC, et al will likely find some unwitting scapegoat(s) to crucify, after QE IV, when it all inevitably goes critical mass in Wonderland....