The Fed paid a record $46.1bn to the US Treasury in 2009, the central bank reported today, after riskier holdings boosted its income 40 per cent to $52.1bn over 2008.
“The significant increase in holdings was primarily due to increased securities holdings as a reseult of the Federal Reserve’s response to the severe economic downturn,” the Fed said in a statement.
The bulk of the income ($46.1bn) comes from securities acquired thorough open market operations – old favourites like Treasuries, but also GSE debt and mortgage backed securities and federal agency securities. The Fed also earned $5.5bn from consolidated limited liability companies (created in response to the crisis) and $2.9bn on loans to banks, primary dealers and others.
The Fed’s income was certainly much higher than any time in its history, but its payment to the Treasury, after adjusting for inflation were only about 12 per cent higher than 1990, toward the end of the savings and loan crisis and during the 1990-1991 recession.
Fed income and payments to Treasury in constant 1982 dollars
