Seven more banks failed late Friday, including institutions in Illinois, Minnesota, Wisconsin, Georgia, and three in Florida. The FDIC posted the liabilities it would assume and which banks would take on customers from the shutter institutions in detail on its website.

According to MarketWatch, "CreditSights, which tracks the dismal data, predicts that in the current cycle, from 2008 through 2011, as many as 1,100 banks will fail. That would wipe out 13.4% of all U.S. banks, representing 7% of U.S. banking assets."

The U.S. Treasury and Congress are putting pressure on the Fed to disclose its governance policies.

Almost three months ago, on June 17, the Obama administration proposed a regulatory overhaul including a "comprehensive review of the Fed's ability to accomplish its existing and proposed functions."

There is some confusion as to why the Treasury is undertaking this task. The Fed was created by Congress to be independent of the executive branch and Congress.

Notch another better-than-expected data point for the U.S. economy: the federal budget deficit totaled $111.4 billion in August, the U.S. Treasury Department announced Friday, Bloomberg News reported -- a level well below the $140.0 billion Bloomberg News survey estimate.

The August deficit brings the 2009 fiscal year deficit to about $1.37 trillion, largely ballooned by the $787 billion stimulus package to jump-start the U.S. economy and the $700 billion bank sector bail-out. There is one month left (September) in the current fiscal year. July's budget deficit was unrevised at $180.6 billion.

Today was another up and away day, although after the 2:00 PM Beige Book and after a Treasury auction, it felt like today was just going to be a difficult one to call.

This is a light week on data and a light day on earnings and that makes it a hard tell each day to have serious conviction for bulls and bears alike. The DJIA went above 9,500 and marks the 4th day in a row of a rally.

Here are today's unofficial closing bell levels:

Dow 9,538.23 +40.89 (0.43%)
S&P 500 1,032.47 +7.08 (0.69%)
Nasdaq 2,058.60 +20.83 (1.02%)

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Two countries, the United States and China, are playing financial poker, with the U.S. Treasury and the Federal Reserve on one side and China on the other.

On one side, wearing a visor and dark glasses, we have Ben Bernanke of the U.S. Federal Reserve, who must fund our $1.8 trillion deficit. So the U.S. Treasury and the Fed are issuing record amounts of treasury securities. Last week alone the Treasury issued $200 billion of debt securities. The results of at least two auctions were a bit shaky.

Did you know that we have a watchdog in charge of overseeing the TARP program? Yes, we have such a person and his name is Neil Barofsky.

Today the U.S. Treasury and the Federal Reserve said that the group of financial programs undertaken have had a significant impact on our financial markets.

That may be true, but Mr. Barofsky reported that the sum total of these programs is exposing federal agencies to a staggering $23.7 trillion.

Here is today's quiz. If you were given $1,000,000 to spend each day, how many days would it take you to spend $12.2 trillion dollars? You are probably wondering where the number $12.2 trillion came from? Well, this is the amount of money the government has committed for economic recovery.

Some of the monies can be accounted for but its still a big mystery where the rest went. So far we know this:

U.S. long-term interest rates hit a high Wednesday with the yield on 10-year notes at 4%. Yields jumped 4 basis points, the biggest jump since 2003. This was up from 3.6% just one week ago. Mortgage lenders use the benchmark 10-year note to price their mortgage rates.

Four percent is the magic number for traders. When the yield reached 4%, traders moved in to buy. The higher rate also took its toll on the stock market, with the Dow down 24.04 to 8739.02.

As more details were unveiled yesterday about the Public-Private Partnership proposed by Secretary Timothy Geithner to deal with the "Toxic Assets" currently on the balance sheets of many of the major banks, the equity markets around the world experience what can only be described as euphoria. Equity markets in the United States experienced one of the biggest one-day rallies in history. Obviously, Wall Street likes the plan at first glance.

However, Paul Krugman, the liberal Noble Prize winner, wrote an editorial in The New York Times attacking the plan as "Cash for Trash." Subsequently, Newt Gingrich, the former Republican Speaker of the House, announced on Fox News that he agreed with Professor Krugman. When senior figures on both left and right agree, it may be wise to look past the euphoria.

Tim Geithner hasn't been Treasury Secretary for much more than a month, and already Henry Blodget is calling for his head.

Blodget writes that Geithner's ideas and personality have failed to inspire and, most importantly, he has "Refused to revisit or defend his almost certainly inaccurate view that this crisis is merely a temporary price decline caused by a lack of liquidity, rather than a collapse of a debt-driven economy. You can't cure the patient if you're treating the wrong problem."

Since last September when all the government money went out the door, stock investors around the world have lost $14.3 trillion. For all the talk, if stock markets were rising now, people would not see the need to spend government money and guarantee bad loans. So one way to look at the government money at risk is this: Is it contributing to a rise in the stock market? So far, the answer is "no."

But that has not stopped government from potentially spending or putting at risk $9.7 trillion. Where did that money go?

While Washington wrangles over $820 billion to stimulate the economy, the Fed and the Treasury have already invested or guaranteed $9 trillion to keep the financial system from imploding. For some strange reason, this much bigger figure seems to fly out the door with no public debate; little clear idea of how it's being spent; or what benefit it's creating. Now the Treasury is poised to announce its own plan to rescue the financial system. I think that plan needs work.

However, the Treasury plan will not be announced as originally scheduled on Monday because there seems to be a concern that it would complicate the passage of the stimulus plan. Meanwhile, Goldman Sachs Group (NYSE: GS) has estimated that it would cost $4 trillion to absorb all the banks' troubled mortgage and consumer debt.

Will Treasury propose a plan to use government funds to do this absorbing? If so, it would mark the biggest example in American history of letting private interests reap profits from their bad decisions -- in the form of keeping their bonuses which total about $100 billion over the last several years -- while sticking the public with the resulting losses which so far exceed $1 trillion.

When Hank Paulson scared Congress into passing the Troubled Asset Relief Plan (TARP) last fall, he said that it would be used to buy toxic waste from banks. That never happened. All we know is that $350 billion of our taxpayer money is gone and that most of it went to banks and a bit to the auto industry. What are they doing with our money? How is the government measuring the success of TARP? Is it helping? Until we get those answers, we should not allow more good money to be thrown after bad.

What we have now is a bunch of talk. Sen. Kent Conrad (D-ND) said "Without the first TARP, we may have a Dow at 4,000 right now and the economy in an absolutely free fall." Thanks Kent -- I'd like to see your proof for that claim. Why not Dow 400? Progress on finding out what happened to the money is coming from Sen. Carl Levin (D-MI) who got Treasury to cough up contracts between the government and 10 financial institutions -- by threatening a subpoena.

The government in the UK is about to unveil a new program to help save businesses and banks. The plans already in place in there have put money into large banks in a fashion not unlike the actions of the Treasury and Fed in the U.S. But, the UK will take that further.

According to The Times, "The next steps to be unveiled within a fortnight are set to include guarantees for businesses of all sizes and official insurance for banks to attach to new securitisations of mortgages and other loans." In other words, the worst assets of banks will get a safety net and businesses will have an easier time getting credit.

The business loan guarantees are a stroke of genius, and it surprising that more of that is not in the U.S. stimulus package. Companies in America are having a terrible time getting access to credit. That leads them to cut jobs and capital expenditures. When their situations get particularly bad, they cut expenses sharply and fire people. That is hardly a formula for driving any recovery as the recession deepens.

If the UK programs get a strongly positive reception from UK business and economists, it may pay for the U.S. Congress to borrow a few pages from the books of their friends across the Atlantic. Aid that works quickly trumps programs that take months to implement, especially when time is short.

Douglas A. McIntyre is an editor at 247wallst.com.

A bipartisan Congressional panel headed by Harvard Law School professor Elizabeth Warren released a report today blasting the U.S. Treasury department for its failures related to the $700 billion Troubled Asset Relief Program (TARP). The report indicates that:

* The Treasury Department has no way to ensure that banks actually lend the money they have received from the government. In fact press reports indicate that banks appear to be hoarding the cash with the excuse that there are no worthy candidates out there.

* The Treasury Department has not yet developed standards for measuring the success of the program. Treasury has given out all but about $75 billion of the first $350 billion. It's outrageous that the Treasury Department didn't develop some way of measuring success before dolling out almost $300 billion of taxpayers' money.

* The Treasury Department has ignored requests for more information or has given incomplete answers to questions raised by the five-member Congressional panel.