With all the hoopla around fraudclosure, it appears that pundits seem to be forgetting one important thing: namely, the fact that in addition to the $6.8 trillion in loans and leases in bank credit (per latest H.8) which is kept on the ponzi books (those afforded the mark-to-unicorn treatment by the FASB), there is also this little thing known as off-balance sheet securitization. And while the Fed was good enough to force the reclassification of around $400 billion in securitized consumer loans to bank books in March, the question of why a far greater number of securitized real estate loans continue to be carried off the bank books is (or should be) suddenly rather timely. Especially since the number is rather large: some $1,387,796,500,000 as of October 6 (seasonally adjusted) which also represent the bulk of off balance sheet holdings. Perhaps some of those very vocal advocates of how this whole mortgage crisis is nothing but a storm in a teacup can provide for a definite accounting method of how these nearly $1.4 trillion in securitizations will not be impaired. As otherwise the investing public may get some very nasty ideas that not all is well in off-balance sheet world and that this whole overture is nothing but a way to streamline the implementation of TARP 2...

Visual representation of said loans:

Source: H.8

h/t Geoffrey Batt