The question becomes: why would Congress pressure the FASB to change the accounting rules from mark-to-mark to mark-to-model?

Sources share closed-door information that the accounting rule needed to be changed in order to maintain the financial system in its current form.

If large financial institutions were forced to tell the truth about the "assets" they are holding on their books, the entire banking industry in the United States would be deemed insolvent and have to be scrapped. Many of the so-called financial elite would be wiped out.

Reaping the calamitous consequences of their disastrous actions is not something that they intend to do.

The decision has been made to hide the real truth from the public. 

It is not that each and every bank in the U.S. is insolvent, but that the negative net worth at the majority of the giant financial firms would overwhelm the positive net worth of the smaller regional and community banks.

The simplest way to make the negative net worth problem go away is to lie about the true value of the assets that the giant financial firms are holding.

Thus Congress pressured the FASB to change the rules and allow the well-connected financial firms to no longer state the assets on their books at market value, but instead they could list them at whatever their "computer models" indicate their value to be.

In the coming months you will see a tremendous turnaround in the profit reports released by the giant financial and quasi-financial institutions. The media will proclaim "recovery." It will appear that these firms have weathered the storm and are well down the road to recapitalization.

That will not be true. It will merely be an illusion based upon the mythical values created by their own computer models.

Nonetheless the stock market will rally on the back of the "greatly improved earnings."

The only problem is that it will all be a lie. One giant lie to hide the real truth.

I have a friend who is an expert programmer. He has just completed a very sophisticated computer model for me that indicates every pair of worn-out running shoes that I own is worth $1 billion.

I probably will not be able to sell any of those running shoes on Ebay for that price, but the computer model sure will come in handy when I launch my new IPO, "Oliver's Running Shoes."

Right now, on the balance sheet, there are $20 billion in assets, and zero liabilities. And that is a truthful, accurate accounting statement. My computer model "proves" it.

Regarding the foul smell emanating from the balance sheet, that's not the smell of used running shoes, that's the smell of bogus accounting.

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