Federal Reserve Made Record Profit in 2009

Discussion in 'Wall St. News' started by nutmeg, Jan 12, 2010.

  1. The U.S. Federal Reserve made record profits in 2009 and will return $45 billion to the U.S. Treasury, after its efforts to prop up the economy created a windfall for the government, the Washington Post reported.

    The $45 billion reflects the highest earnings in the 96-year history of the U.S. central bank, the newspaper reported on its website late on Monday. The figure was obtained by calculations based on public documents, the Post said.

    The Fed funds itself from its own operations and returns its profits to the Treasury. The largest previous refund to the Treasury was $34.6 billion in 2007, the Post said.

    The Federal Reserve headquarters in Washington, DC.

    The report said much of the Fed's higher earnings were sparked by the central bank's aggressive program of buying bonds to push interest rates down and stimulate growth.

    "By the end of 2009, the Fed owned $1.8 trillion in U.S. government debt and mortgage-related securities, up from $497 billion a year earlier," the newspaper reported. It said interest income on the investments was a major source of Fed profits.

    The central bank also made money on its emergency loans and on special programs to prop up lending.

    Even though it had reported billions of dollars of decline in the value of loans made to bail out investment bank Bear Stearns and insurer American International Group, the Fed received $4.7 billion in interest payments from those loans in 2009, the Post said.

    The report said the Fed was due to release its estimate of 2009 earnings on Tuesday.
  2. Why not, they have a business model to die for.
  3. and how much did they pay in the form of dividend to their shareholders, i.e. gs, bac, etc??
  4. sprstpd


    So are these earnings mark-to-market earnings or has the Fed actually gotten out of the positions mentioned?
  5. They said they made most of it on buying their own bonds, so it's mark-to-market. Just wait till they're going to sell, lol.
  6. It's like you buy up some stock with all your buying power and then at the top you say "LOOK MUMMY, I've made a profit !" :D
  7. sprstpd


    If the Fed is not out of these positions, I doubt they could unload it all at a profit. And probably they are adding to their position all the time now. It's "all in" everybody and someday it ain't gonna work anymore.
  8. mikasa


    exactly and that day is closer than they think
  9. u mean like unrealized profit marked to market?

    at the scale they buy, they can't possibly unload all at that level?
  10. Maybe the Fed will send those bonds to 3rd world countries and call it foreign aid.:D
    #10     Jan 12, 2010