The GAO has released its report about the actions of the Fed during the economic crisis and I have to tell you that I think even the most cynical of us will be blown away by some of the findings, or at least some of the numbers.  I don't care who you are – $16 trillion is a LOT of money.  From a press release by Sen. Bernie Sanders:

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse.  In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

I haven't read the whole GAO report, but just browsing through it I found this nugget of "holy s***!" in Appendix III: Assistance to American International Group, Inc. found on page 162 of the report:

The AIG RCF and SBF have closed and were fully repaid and FRBNY expects full repayment on amounts outstanding on its loans to Maiden Lane II LLC and Maiden Lane III LLC. The Federal Reserve Board authorized changes to the borrowing limit and other terms for the AIG RCF over time, and AIG fully repaid amounts outstanding from the AIG RCF in January 2011. AIG’s borrowing under the AIG SBF peaked at $20.6 billion before the AIG SBF was fully repaid in connection with the creation of Maiden Lane II LLC in December 2008. As of June 29, 2011, $8.6 billion and $12.3 billion in principal and accrued interest remained outstanding on FRBNY’s senior loans to Maiden Lane II LLC and Maiden Lane III LLC, respectively. As discussed below, FRBNY recently began to hold auctions to sell parts of the Maiden Lane II LLC portfolio. According to FRBNY staff, the AIG life insurance securitization option was abandoned for a number of reasons, including that it would have required FRBNY to manage a long-term exposure to life insurance businesses with which it had little experience… 

While AIG has repaid its direct assistance provided by FRBNY, FRBNY’s loans to Maiden Lane II LLC and Maiden Lane III LLC remain outstanding and Treasury continues to have significant equity exposure. We have issued several reports that provide additional background on the federal government’s assistance to AIG.

I think what this is saying is that all the direct assistance to AIG has been paid back, but some of the money that the Federal Reserve put into two special purpose vehicles (Maiden Lane II, LLC and Maiden Lane III, LLC) established to help AIG, about $8.6 billion in principal and $12.3 billion in accrued interest has not been repaid yet.  The Fed expects to start recouping the money soon, but it's kind of mind blowing that we're still on the hook for almost $21 billion for AIG alone.

(h/t to Ed Cone for the link)