[RdSnt]

There are two ways to look at this, both bad.

If we regard the direction of America as very rapidly turning towards a classic fascist regime, then the Fed represents the key entity of that system.
Let's keep in mind that with the rescues of the recent institutions, FM, FM, AIG; the Fed now owns these corporations. They didn't just give them money, they took "securities" as collateral. As of this morning the Fed owns over 90% of AIG.
In essence then the Fed, a private company, acting as financial representative of the US government is the largest corporation in the world by a very wide margin. They also wield an enormous amount of power with regards to how the rest of the global economy behaves towards the US.
By backing the obligations of the "rescued" companies they forestall the re-evaluation of all these phantom assets to their true market value. Certainly something the US wants to avoid, but also a very important tool persuasion when it comes to the global financial community.

The other way to look at this is that the Fed is now the single point of failure that can utterly destroy the US, and the decision making process has narrowed to just a handful of people. None of whom I'd trust with my bank account, which is considerably smaller than the funds they are responsible for.