STATEMENT_NN1 OF_IO THE_AT COMPTROLLER_NN1 GENERAL_NN1 OF_IO THE_AT UNITED_NP1 STATES_NP1 Given_VVN the_AT federal_JJ government_NN1 's_GE near-_NN1 and_CC long-term_JJ fiscal_JJ challenges_NN2 ,_, the_AT need_NN1 for_IF transparency_NN1 and_CC for_IF the_AT Congress_NN1 ,_, the_AT administration_NN1 ,_, and_CC federal_JJ managers_NN2 to_TO have_VHI reliable_JJ ,_, useful_JJ ,_, and_CC timely_JJ financial_JJ and_CC performance_NN1 information_NN1 is_VBZ greater_JJR than_CSN ever_RR ._. 
As_CSA our_APPGE report_NN1 on_II the_AT U.S._NP1 government_NN1 's_GE consolidated_JJ financial_JJ statements_NN2 illustrates_VVZ ,_, however_RR ,_, even_CS21 though_CS22 certain_JJ progress_NN1 has_VHZ been_VBN made_VVN ,_, much_DA1 work_NN1 remains_VVZ to_TO improve_VVI federal_JJ financial_JJ management_NN1 ._. 
Consequently_RR ,_, financial_JJ management_NN1 needs_VVZ to_TO be_VBI a_AT1 top_JJ priority_NN1 of_IO this_DD1 administration_NN1 and_CC the_AT Congress_NN1 ._. 
The_AT economic_JJ recession_NN1 and_CC the_AT federal_JJ government_NN1 's_GE unprecedented_JJ actions_NN2 intended_VVD to_TO stabilize_VVI the_AT financial_JJ markets_NN2 and_CC to_TO promote_VVI economic_JJ recovery_NN1 have_VH0 significantly_RR affected_VVN the_AT federal_JJ government_NN1 's_GE financial_JJ condition_NN1 ._. 
The_AT resulting_JJ substantial_JJ investments_NN2 and_CC increases_VVZ in_II liabilities_NN2 ,_, net_JJ operating_NN1 cost_NN1 ,_, the_AT unified_JJ budget_NN1 deficit_NN1 ,_, and_CC debt_NN1 held_VVN by_II the_AT public_NN1 are_VBR reported_VVN in_II the_AT U.S._NP1 government_NN1 's_GE consolidated_JJ financial_JJ statements_NN2 for_IF fiscal_JJ year_NNT1 2009_MC ._. 
Because_CS the_AT valuation_NN1 of_IO these_DD2 assets_NN2 and_CC liabilities_NN2 is_VBZ based_VVN on_II assumptions_NN2 and_CC estimates_VVZ that_CST are_VBR inherently_RR subject_II21 to_II22 substantial_JJ uncertainty_NN1 arising_VVG from_II the_AT uniqueness_NN1 of_IO certain_JJ transactions_NN2 and_CC the_AT likelihood_NN1 of_IO future_JJ changes_NN2 in_RR21 general_RR22 economic_JJ ,_, regulatory_JJ ,_, and_CC market_VV0 conditions_NN2 ,_, actual_JJ results_NN2 may_VM be_VBI materially_RR different_JJ from_II the_AT reported_JJ amounts_NN2 ._. 
Further_RRR ,_, the_AT ultimate_JJ cost_NN1 of_IO these_DD2 actions_NN2 and_CC their_APPGE impact_NN1 on_II the_AT federal_JJ government_NN1 's_GE financial_JJ condition_NN1 will_VM not_XX be_VBI known_VVN for_IF some_DD time_NNT1 ._. 
More_RGR significantly_RR ,_, the_AT federal_JJ government_NN1 faces_VVZ long-term_JJ challenges_NN2 resulting_VVG from_II large_JJ and_CC growing_JJ structural_JJ deficits_NN2 that_CST are_VBR driven_VVN primarily_RR by_II rising_VVG health_NN1 care_NN1 costs_NN2 and_CC known_VVN demographic_JJ trends_NN2 ._. 
This_DD1 unsustainable_JJ path_NN1 must_VM be_VBI addressed_VVN soon_RR by_II policymakers_NN2 ._. 
The_AT longer_JJR actions_NN2 are_VBR delayed_VVN ,_, the_AT more_RGR difficult_JJ adjustments_NN2 are_VBR likely_JJ to_TO become_VVI ._. 
Our_APPGE report_NN1 on_II the_AT U.S._NP1 government_NN1 's_GE consolidated_JJ financial_JJ statements_NN2 is_VBZ enclosed_VVN ._. 
In_II summary_NN1 ,_, we_PPIS2 found_VVD the_AT following_JJ :_: Certain_JJ material_NN1 weaknesses_NN2 in_II internal_JJ control_NN1 over_II financial_JJ reporting_NN1 and_CC other_JJ limitations_NN2 on_II the_AT scope_NN1 of_IO our_APPGE work_NN1 resulted_VVN in_II conditions_NN2 that_CST prevented_VVD us_PPIO2 from_II expressing_VVG an_AT1 opinion_NN1 on_II the_AT fiscal_JJ year_NNT1 2009_MC and_CC 2008_MC financial_JJ statements_NN2 other_II21 than_II22 the_AT Statements_NN2 of_IO Social_JJ Insurance_NN1 ._. 
About_RG $906_NNU billion_NNO ,_, or_CC 34_MC percent_NNU ,_, of_IO the_AT federal_JJ government_NN1 's_VBZ reported_VVN total_JJ assets_NN2 as_II21 of_II22 September_NPM1 30_MC ,_, 2009_MC ,_, and_CC approximately_RR $784_NNU billion_NNO ,_, or_CC 23_MC percent_NNU ,_, of_IO the_AT federal_JJ government_NN1 's_VBZ reported_VVN net_JJ cost_NN1 for_IF fiscal_JJ year_NNT1 2009_MC relate_VV0 to_II four_MC agencies_NN2 '_GE fiscal_JJ year_NNT1 2009_MC financial_JJ statements_NN2 that_CST as_II21 of_II22 the_AT date_NN1 of_IO our_APPGE report_NN1 ,_, received_VVD disclaimers_NN2 of_IO opinion_NN1 or_CC were_VBDR not_XX audited_VVN ._. 
The_AT 2009_MC ,_, 2008_MC ,_, and_CC 2007_MC Statements_NN2 of_IO Social_JJ Insurance_NN1 are_VBR presented_VVN fairly_RR ,_, in_II all_DB material_JJ respects_NN2 ,_, in_II conformity_NN1 with_IW U.S._NP1 generally_RR accepted_JJ accounting_NN1 principles_NN2 ._. 
Given_VVN the_AT importance_NN1 of_IO social_JJ insurance_NN1 programs_NN2 to_II the_AT federal_JJ government_NN1 's_GE long-term_JJ fiscal_JJ outlook_NN1 ,_, the_AT Statement_NN1 of_IO Social_JJ Insurance_NN1 is_VBZ critical_JJ to_II understanding_VVG the_AT federal_JJ government_NN1 's_GE financial_JJ condition_NN1 and_CC fiscal_JJ sustainability_NN1 ._. 
Material_NN1 weaknesses_NN2 resulted_VVN in_II ineffective_JJ internal_JJ control_NN1 over_II financial_JJ reporting_NN1 (_( including_II safeguarding_VVG of_IO assets_NN2 )_) ._. 
Our_APPGE work_NN1 to_TO test_VVI compliance_NN1 with_IW selected_JJ provisions_NN2 of_IO laws_NN2 and_CC regulations_NN2 in_II fiscal_JJ year_NNT1 2009_MC was_VBDZ limited_VVN by_II the_AT material_NN1 weaknesses_NN2 and_CC other_JJ scope_NN1 limitations_NN2 discussed_VVN in_II our_APPGE report_NN1 ._. 
While_CS significant_JJ progress_NN1 has_VHZ been_VBN made_VVN in_II improving_VVG federal_JJ financial_JJ management_NN1 since_CS the_AT federal_JJ government_NN1 began_VVD preparing_VVG consolidated_JJ financial_JJ statements_NN2 years_NNT2 ago_RA ,_, three_MC major_JJ impediments_NN2 continued_VVD to_TO prevent_VVI us_PPIO2 from_II rendering_VVG an_AT1 opinion_NN1 on_II the_AT federal_JJ government_NN1 's_GE accrual-based_JJ consolidated_JJ financial_JJ statements_NN2 over_II this_DD1 period_NN1 of_IO time_NNT1 :_: (_( 1_MC1 )_) serious_JJ financial_JJ management_NN1 problems_NN2 at_II the_AT Department_NN1 of_IO Defense_NN1 (_( DOD_NP1 )_) that_CST have_VH0 prevented_VVN DOD_NP1 's_GE financial_JJ statements_NN2 from_II being_VBG auditable_JJ ,_, (_( 2_MC )_) the_AT federal_JJ government_NN1 's_GE inability_NN1 to_TO adequately_RR account_VVI for_IF and_CC reconcile_VV0 intragovernmental_JJ activity_NN1 and_CC balances_VVZ between_II federal_JJ agencies_NN2 ,_, and_CC (_( 3_MC )_) the_AT federal_JJ government_NN1 's_GE ineffective_JJ process_NN1 for_IF preparing_VVG the_AT consolidated_JJ financial_JJ statements_NN2 ._. 
In_RR21 addition_RR22 ,_, the_AT financial_JJ statements_NN2 of_IO the_AT Department_NN1 of_IO Homeland_NN1 Security_NN1 and_CC the_AT National_JJ Aeronautics_NN1 and_CC Space_NN1 Administration_NN1 for_IF fiscal_JJ years_NNT2 2009_MC and_CC 2008_MC were_VBDR not_XX auditable_JJ or_CC were_VBDR not_XX subjected_VVN to_TO audit_VVI by_II agency_NN1 auditors_NN2 ._. 
In_II31 addition_II32 to_II33 the_AT material_NN1 weaknesses_NN2 underlying_VVG these_DD2 major_JJ impediments_NN2 ,_, we_PPIS2 noted_VVD three_MC material_JJ weaknesses_NN2 involving_VVG the_AT federal_JJ government_NN1 's_GE inability_NN1 to_II (_( 1_MC1 )_) determine_VV0 the_AT full_JJ extent_NN1 to_II which_DDQ improper_JJ payments_NN2 occur_VV0 and_CC reasonably_RR assure_VV0 that_CST appropriate_JJ actions_NN2 are_VBR taken_VVN to_TO reduce_VVI improper_JJ payments_NN2 ,_, currently_RR estimated_VVN to_TO be_VBI at_RR21 least_RR22 $98_NNU billion_NNO ;_; (_( 2_MC )_) identify_VV0 and_CC resolve_VV0 information_NN1 security_NN1 control_NN1 deficiencies_NN2 and_CC manage_VV0 information_NN1 security_NN1 risks_NN2 on_II an_AT1 ongoing_JJ basis_NN1 ;_; and_CC (_( 3_MC )_) effectively_RR manage_VV0 its_APPGE tax_NN1 collection_NN1 activities_NN2 ._. 
Until_CS the_AT problems_NN2 outlined_VVN in_II our_APPGE audit_NN1 report_NN1 are_VBR adequately_RR addressed_VVN ,_, they_PPHS2 will_VM continue_VVI to_TO have_VHI adverse_JJ implications_NN2 for_IF the_AT federal_JJ government_NN1 and_CC American_JJ taxpayers_NN2 ._. 
The_AT material_NN1 weaknesses_NN2 discussed_VVN in_II our_APPGE report_NN1 continued_VVD to_TO hamper_VVI the_AT federal_JJ government_NN1 's_GE ability_NN1 to_TO reliably_RR report_VVI a_AT1 significant_JJ portion_NN1 of_IO its_APPGE assets_NN2 ,_, liabilities_NN2 ,_, costs_NN2 ,_, and_CC other_JJ related_JJ information_NN1 ;_; affect_VV0 the_AT federal_JJ government_NN1 's_GE ability_NN1 to_TO reliably_RR measure_VVI the_AT full_JJ cost_NN1 as_II31 well_II32 as_II33 the_AT financial_JJ and_CC nonfinancial_JJ performance_NN1 of_IO certain_JJ programs_NN2 and_CC activities_NN2 ;_; impair_VV0 the_AT federal_JJ government_NN1 's_GE ability_NN1 to_TO adequately_RR safeguard_VVI significant_JJ assets_NN2 and_CC properly_RR record_VV0 various_JJ transactions_NN2 ;_; and_CC hinder_VV0 the_AT federal_JJ government_NN1 from_II having_VHG reliable_JJ financial_JJ information_NN1 to_TO operate_VVI in_II an_AT1 efficient_JJ and_CC effective_JJ manner_NN1 ._. 
The_AT federal_JJ government_NN1 reported_VVD a_AT1 net_JJ operating_NN1 cost_NN1 of_IO $1.3_NNU trillion_NNO and_CC a_AT1 unified_JJ budget_NN1 deficit_NN1 of_IO $1.4_NNU trillion_NNO for_IF fiscal_JJ year_NNT1 2009_MC ,_, significantly_RR higher_JJR than_CSN the_AT amounts_NN2 in_II fiscal_JJ year_NNT1 2008_MC ._. 
As_II21 of_II22 September_NPM1 30_MC ,_, 2009_MC ,_, debt_NN1 held_VVN by_II the_AT public_NN1 increased_VVN to_II 53_MC percent_NNU of_IO gross_JJ domestic_JJ product_NN1 (_( GDP_NN1 )_) ._. 
These_DD2 increases_NN2 are_VBR primarily_RR the_AT result_NN1 of_IO the_AT effects_NN2 of_IO the_AT recession_NN1 and_CC the_AT costs_NN2 of_IO the_AT federal_JJ government_NN1 's_GE actions_NN2 to_TO stabilize_VVI the_AT financial_JJ markets_NN2 and_CC to_TO promote_VVI economic_JJ recovery_NN1 ._. 
In_II December_NPM1 2007_MC ,_, the_AT United_NP1 States_NP1 entered_VVD what_DDQ has_VHZ turned_VVN out_RP to_TO be_VBI its_APPGE deepest_JJT recession_NN1 since_CS the_AT end_NN1 of_IO World_NN1 War_NN1 II_MC ._. 
Between_II the_AT fourth_MD quarter_NN1 of_IO 2007_MC and_CC the_AT third_MD quarter_NN1 of_IO 2009_MC ,_, GDP_NN1 fell_VVD by_RP about_RG 2.8_MC percent_NNU ._. 
The_AT nation_NN1 's_GE unemployment_NN1 rate_NN1 rose_VVD from_II 4.9_MC percent_NNU in_II 2007_MC to_II 10.2_MC percent_NNU in_II October_NPM1 2009_MC ,_, a_AT1 level_NN1 not_XX seen_VVN since_II April_NPM1 1983_MC ._. 
Federal_JJ tax_NN1 revenues_NN2 automatically_RR decline_VV0 when_RRQ GDP_NN1 and_CC incomes_NN2 fall_VV0 ,_, and_CC at_II the_AT same_DA time_NNT1 ,_, spending_VVG on_II unemployment_NN1 benefits_NN2 and_CC other_JJ income-support_JJ programs_NN2 automatically_RR increases_VVZ ._. 
As_II21 of_II22 September_NPM1 30_MC ,_, 2009_MC ,_, the_AT federal_JJ government_NN1 's_GE actions_NN2 to_TO stabilize_VVI the_AT financial_JJ markets_NN2 and_CC to_TO promote_VVI economic_JJ recovery_NN1 resulted_VVN in_II an_AT1 increase_NN1 in_II reported_JJ federal_JJ assets_NN2 of_IO over_RG $500_NNU billion_NNO (_( e.g._REX ,_, the_AT Troubled_JJ Asset_NN1 Relief_NN1 Program_NN1 (_( TARP_NP1 )_) equity_NN1 investments_NN2 ,_, and_CC investments_NN2 in_II the_AT Federal_JJ National_JJ Mortgage_NN1 Association_NN1 (_( Fannie_NP1 Mae_NP1 )_) and_CC the_AT Federal_JJ Home_NN1 Loan_NN1 Mortgage_NN1 Corporation_NN1 (_( Freddie_NP1 Mac_NP1 )_) and_CC mortgage-backed_JJ securities_NN2 guaranteed_VVN by_II them_PPHO2 )_) ,_, which_DDQ is_VBZ net_JJ of_IO about_RG $80_NNU billion_NNO in_II valuation_NN1 losses_NN2 ._. 
In_RR21 addition_RR22 ,_, the_AT federal_JJ government_NN1 reported_VVD incurring_VVG additional_JJ significant_JJ liabilities_NN2 (_( e.g._REX ,_, liquidity_NN1 guarantees_VVZ to_II Fannie_NP1 Mae_NP1 and_CC Freddie_NP1 Mac_NP1 )_) and_CC related_JJ net_JJ cost_NN1 resulting_VVG from_II these_DD2 actions_NN2 ._. 
Because_CS the_AT valuation_NN1 of_IO these_DD2 assets_NN2 and_CC liabilities_NN2 is_VBZ based_VVN on_II assumptions_NN2 and_CC estimates_VVZ that_CST are_VBR inherently_RR subject_II21 to_II22 substantial_JJ uncertainty_NN1 arising_VVG from_II the_AT uniqueness_NN1 of_IO certain_JJ transactions_NN2 and_CC the_AT likelihood_NN1 of_IO future_JJ changes_NN2 in_RR21 general_RR22 economic_JJ ,_, regulatory_JJ ,_, and_CC market_VV0 conditions_NN2 ,_, actual_JJ results_NN2 may_VM be_VBI materially_RR different_JJ from_II the_AT reported_JJ amounts_NN2 ._. 
For_REX21 example_REX22 ,_, assets_NN2 and_CC liabilities_NN2 subject_II21 to_II22 substantial_JJ uncertainty_NN1 include_VV0 the_AT following_JJ :_: The_AT U.S._NP1 government_NN1 's_GE consolidated_JJ financial_JJ statements_NN2 for_IF fiscal_JJ year_NNT1 2009_MC include_VV0 approximately_RR $65_NNU billion_NNO of_IO investments_NN2 in_II Fannie_NP1 Mae_NP1 and_CC Freddie_NP1 Mac_NP1 (_( net_NN1 of_IO about_RG $38_NNU billion_NNO in_II valuation_NN1 losses_NN2 )_) ,_, about_RG $92_NNU billion_NNO of_IO liabilities_NN2 for_IF future_JJ payments_NN2 under_II liquidity_NN1 guarantees_VVZ with_IW these_DD2 entities_NN2 ,_, and_CC about_RG $126_NNU billion_NNO of_IO related_JJ net_JJ cost_NN1 ._. 
The_AT statements_NN2 also_RR discuss_VV0 an_AT1 estimated_JJ additional_JJ liability_NN1 and_CC net_JJ cost_NN1 of_IO about_RG $130_NNU billion_NNO related_VVN to_II these_DD2 guarantees_NN2 that_CST could_VM be_VBI incurred_VVN under_II an_AT1 "_" extreme_JJ case_NN1 "_" scenario_NN1 ,_, based_VVN on_II the_AT estimates_NN2 as_II21 of_II22 September_NPM1 30_MC ,_, 2009_MC ._. 
Also_RR ,_, these_DD2 estimates_NN2 could_VM be_VBI affected_VVN by_II the_AT Department_NN1 of_IO the_AT Treasury_NN1 agreement_NN1 ,_, subsequent_II21 to_II22 September_NPM1 30_MC ,_, 2009_MC ,_, to_TO increase_VVI ,_, as_CSA necessary_JJ ,_, its_APPGE liquidity_NN1 guarantees_VVZ to_II Fannie_NP1 Mae_NP1 and_CC Freddie_NP1 Mac_NP1 to_TO accommodate_VVI any_DD cumulative_JJ reduction_NN1 in_II the_AT net_JJ worth_NN1 of_IO these_DD2 two_MC entities_NN2 over_II the_AT next_MD 3_MC years_NNT2 ._. 
The_AT federal_JJ government_NN1 reported_VVD TARP_NP1 direct_JJ loans_NN2 and_CC equity_NN1 investments_NN2 of_IO approximately_RR $238_NNU billion_NNO as_II21 of_II22 September_NPM1 30_MC ,_, 2009_MC (_( net_NN1 of_IO about_RG $53_NNU billion_NNO in_II valuation_NN1 losses_NN2 ,_, including_II $30_NNU billion_NNO related_VVN to_II American_JJ International_JJ Group_NN1 ,_, Inc_JJ ._. 
(_( AIG_NP1 )_) and_CC $31_NNU billion_NNO related_VVN to_II loans_NN2 to_II and_CC equity_NN1 investments_NN2 in_II certain_JJ entities_NN2 in_II the_AT automotive_JJ industry_NN1 ,_, including_II General_JJ Motors_NN2 and_CC Chrysler_NP1 ,_, partially_RR offset_VVN by_II valuation_NN1 gains_NN2 of_IO $8_NNU billion_NNO primarily_RR related_VVN to_II investments_NN2 in_II financial_JJ institutions_NN2 )_) ._. 
The_AT federal_JJ government_NN1 reported_VVD Federal_JJ Deposit_NN1 Insurance_NN1 Corporation_NN1 (_( FDIC_NP1 )_) liabilities_NN2 of_IO $59_NNU billion_NNO as_II21 of_II22 September_NPM1 30_MC ,_, 2009_MC ,_, and_CC about_RG $45_NNU billion_NNO of_IO net_JJ cost_NN1 related_VVN to_II estimated_JJ failures_NN2 of_IO insured_JJ financial_JJ institutions_NN2 ,_, guarantees_NN2 ,_, and_CC bank_NN1 resolutions_NN2 ._. 
These_DD2 liabilities_NN2 and_CC cost_NN1 resulted_VVN in_II a_AT1 negative_JJ reported_JJ ratio_NN1 of_IO reserves_NN2 to_II estimated_JJ insured_JJ deposits_NN2 in_II FDIC_NP1 's_GE Deposit_NN1 Insurance_NN1 Fund_NN1 (_( DIF_NP1 )_) ,_, far_RR below_II the_AT statutory_JJ minimum_NN1 of_IO 1.15_MC percent_NNU ._. 
FDIC_NP1 recently_RR reported_VVN additional_JJ losses_NN2 incurred_VVN by_II the_AT DIF_NP1 from_II actual_JJ and_CC anticipated_JJ financial_JJ institution_NN1 failures_NN2 and_CC resolution_NN1 activity_NN1 through_II December_NPM1 31_MC ,_, 2009_MC ,_, resulting_VVG in_II a_AT1 further_JJR increase_NN1 in_II DIF_NP1 's_GE negative_JJ reported_JJ ratio_NN1 of_IO reserves_NN2 to_II estimated_JJ insured_JJ deposits_NN2 ._. 
FDIC_NP1 has_VHZ implemented_VVN a_AT1 restoration_NN1 plan_NN1 to_TO replenish_VVI the_AT DIF_NP1 's_GE reserves_NN2 to_II the_AT statutory_JJ minimum_NN1 ._. 
Further_JJR losses_NN2 could_VM occur_VVI if_CS potentially_RR vulnerable_JJ insured_JJ institutions_NN2 ultimately_RR fail_VV0 ,_, guarantees_NN2 result_VV0 in_II greater_JJR than_CSN anticipated_JJ losses_NN2 ,_, or_CC economic_JJ and_CC market_VV0 conditions_NN2 further_RRR deteriorate_VV0 ._. 
Further_JJR deterioration_NN1 in_II the_AT residential_JJ real_JJ estate_NN1 market_NN1 could_VM result_VVI in_II additional_JJ losses_NN2 for_IF the_AT Federal_JJ Housing_NN1 Administration_NN1 (_( FHA_NP1 )_) beyond_II the_AT reported_JJ loan_NN1 guarantee_NN1 liability_NN1 of_IO about_RG $34_NNU billion_NNO as_II21 of_II22 September_NPM1 30_MC ,_, 2009_MC ._. 
During_II fiscal_JJ year_NNT1 2009_MC ,_, FHA_NP1 's_GE guaranteed_JJ loan_NN1 principal_NN1 amount_NN1 outstanding_JJ increased_JJ by_II about_RG 42_MC percent_NNU compared_VVN to_II the_AT amount_NN1 in_II fiscal_JJ year_NNT1 2008_MC ._. 
In_RR21 addition_RR22 ,_, the_AT federal_JJ government_NN1 's_GE financial_JJ condition_NN1 will_VM be_VBI further_RRR affected_VVN as_CSA its_APPGE actions_NN2 continue_VV0 to_TO be_VBI implemented_VVN in_II fiscal_JJ year_NNT1 2010_MC and_CC later_RRR ._. 
For_REX21 example_REX22 ,_, several_DA2 hundred_NNO billion_NNO dollars_NNU2 of_IO the_AT total_NN1 estimated_VVD $862_NNU billion_NNO cost_NN1 under_II the_AT American_JJ Recovery_NN1 and_CC Reinvestment_NP1 Act_NN1 of_IO 2009_MC (_( Recovery_NN1 Act_NN1 )_) remain_VV0 to_TO be_VBI disbursed_VVN ._. 
Also_RR ,_, continued_JJ implementation_NN1 of_IO TARP_NP1 ,_, which_DDQ was_VBDZ extended_VVN through_II October_NPM1 3_MC ,_, 2010_MC ,_, is_VBZ likely_JJ to_TO result_VVI in_II additional_JJ cost_NN1 ,_, and_CC the_AT FHA_NN1 mortgage_NN1 guarantee_NN1 program_NN1 could_VM result_VVI in_II additional_JJ cost_NN1 ._. 
Consequently_RR ,_, the_AT ultimate_JJ cost_NN1 of_IO the_AT federal_JJ government_NN1 's_GE actions_NN2 and_CC their_APPGE effect_NN1 on_II the_AT federal_JJ government_NN1 's_GE financial_JJ condition_NN1 will_VM not_XX be_VBI known_VVN for_IF some_DD time_NNT1 ._. 
Further_RRR ,_, there_EX are_VBR risks_NN2 that_CST the_AT federal_JJ government_NN1 's_GE financial_JJ condition_NN1 could_VM be_VBI affected_VVN in_II the_AT future_NN1 by_II other_JJ factors_NN2 ,_, including_II the_AT following_JJ :_: Several_DA2 initiatives_NN2 undertaken_VVN in_II 2009_MC by_II the_AT Federal_JJ Reserve_NN1 to_TO stabilize_VVI the_AT financial_JJ markets_NN2 have_VH0 led_VVN to_II a_AT1 significant_JJ change_NN1 in_II the_AT reported_JJ composition_NN1 and_CC size_NN1 of_IO the_AT Federal_JJ Reserve_NN1 's_GE balance_NN1 sheet_NN1 ,_, including_II the_AT purchase_NN1 of_IO over_RG $900_NNU billion_NNO in_II mortgage-backed_JJ securities_NN2 guaranteed_VVN by_II Fannie_NP1 Mae_NP1 ,_, Freddie_NP1 Mac_NP1 ,_, and_CC the_AT Government_NN1 National_JJ Mortgage_NN1 Association_NN1 as_II21 of_II22 the_AT end_NN1 of_IO 2009_MC ._. 
If_CS the_AT Federal_JJ Reserve_NN1 sells_VVZ these_DD2 securities_NN2 at_II a_AT1 loss_NN1 ,_, additional_JJ federal_JJ government_NN1 deposits_NN2 at_II the_AT Federal_JJ Reserve_NN1 may_VM be_VBI needed_VVN ,_, future_JJ payments_NN2 of_IO Federal_JJ Reserve_JJ earnings_NN2 to_II the_AT federal_JJ government_NN1 may_VM be_VBI reduced_VVN ,_, or_CC both_DB2 ._. 
Although_CS the_AT Recovery_NN1 Act_NN1 provided_CS some_DD fiscal_JJ relief_NN1 to_II the_AT states_NN2 ,_, expected_VVD continued_JJ state_NN1 fiscal_JJ challenges_NN2 could_VM place_VVI pressure_NN1 on_II the_AT federal_JJ government_NN1 to_TO provide_VVI further_JJR relief_NN1 to_II them_PPHO2 ._. 
Looking_VVG ahead_RL ,_, the_AT federal_JJ government_NN1 will_VM need_VVI to_TO determine_VVI the_AT most_RGT expeditious_JJ manner_NN1 in_II which_DDQ to_TO bring_VVI closure_NN1 to_II its_APPGE financial_JJ stabilization_NN1 initiatives_NN2 while_CS optimizing_VVG its_APPGE investment_NN1 returns_NN2 ._. 
In_II31 addition_II32 to_II33 managing_VVG these_DD2 actions_NN2 ,_, problems_NN2 in_II the_AT nation_NN1 's_GE financial_JJ sector_NN1 have_VH0 exposed_VVN serious_JJ weaknesses_NN2 in_II the_AT current_JJ U.S._NP1 financial_JJ regulatory_JJ system_NN1 ,_, which_DDQ ,_, if_CS not_XX effectively_RR addressed_VVN ,_, may_VM cause_VVI the_AT system_NN1 to_TO fail_VVI to_TO prevent_VVI similar_JJ or_CC even_RR worse_JJR crises_NN2 in_II the_AT future_NN1 ._. 
The_AT current_JJ system_NN1 ,_, which_DDQ was_VBDZ put_VVN into_II place_NN1 over_II the_AT past_JJ 150_MC years_NNT2 ,_, is_VBZ fragmented_JJ and_CC complex_JJ and_CC simply_RR has_VHZ not_XX kept_VVN pace_NN1 with_IW the_AT major_JJ financial_JJ structures_NN2 ,_, innovations_NN2 ,_, and_CC products_NN2 that_CST emerged_VVD during_II the_AT years_NNT2 leading_VVG up_II21 to_II22 the_AT recent_JJ financial_JJ crisis_NN1 ._. 
Consequently_RR ,_, meaningful_JJ financial_JJ regulatory_JJ reform_NN1 is_VBZ of_IO utmost_JJ concern_NN1 ._. 
The_AT federal_JJ government_NN1 faces_VVZ even_RR larger_JJR fiscal_JJ challenges_NN2 in_II the_AT long_JJ term_NN1 ._. 
As_CSA discussed_VVN in_II this_DD1 2009_MC Financial_JJ Report_NN1 of_IO the_AT United_NP1 States_NP1 Government_NN1 (_( Financial_NP1 Report_NN1 )_) ,_, the_AT federal_JJ government_NN1 is_VBZ on_II an_AT1 unsustainable_JJ long-term_JJ fiscal_JJ path_NN1 driven_VVN primarily_RR by_II rising_VVG health_NN1 care_NN1 costs_NN2 and_CC known_VVN demographic_JJ trends_NN2 ._. 
The_AT Statement_NN1 of_IO Social_JJ Insurance_NN1 ,_, for_REX21 example_REX22 ,_, shows_VVZ that_CST the_AT present_JJ value_NN1 of_IO projected_JJ scheduled_JJ benefits_NN2 exceeds_VVZ earmarked_JJ revenues_NN2 for_IF social_JJ insurance_NN1 programs_NN2 (_( e.g._REX ,_, Social_JJ Security_NN1 and_CC Medicare_NP1 )_) by_II about_RG $46_NNU trillion_NNO over_II the_AT next_MD 75-year_NNT1 period_NN1 ._. 
