The Fed Pays $77 Billion to Treasury

by InvestorPlace Staff | January 10, 2012 2:17 pm

Uncle Ben is trying to help out Uncle Sam. On Tuesday, Ben Bernanke’s Federal Reserve announced that it has handed over $76.9 billion to Timothy Geithner’s Treasury Department. The amount represents the Federal Reserve Banks’ 2011 income, minus costs.

A Fed statement[1] says the amount “was derived primarily from $83.6 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities, and GSE debt securities).”

While that’s a hefty chunk of change, it’s slightly less than the Fed’s 2010 net profits of $79.3 billion, which went to the Treasury last year. Still, as The New York Times[2] points out, this year’s payout is far above average: “The Fed made an average annual contribution to the Treasury Department of $23 billion during the five years preceding the financial crisis. In the five years since 2007, the Fed’s average contribution more than doubled to $54 billion.”

So, the Fed’s various quantitative easing programs have proven a boon to the Treasury, at least. And indirectly, to American taxpayers who’ll be footing a slightly smaller interest charge on the nation’s ballooning debt.

Endnotes:
  1. Fed statement: http://www.federalreserve.gov/newsevents/press/other/20120110a.htm
  2. The New York Times: http://www.nytimes.com/2012/01/11/business/economy/fed-returns-77-billion-in-profits-to-treasury.html

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