Fed Delivers $78.4 Billion To The Treasury

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The Federal Reserve Board has announced preliminary unaudited results indicating that its Reserve Banks provided for payments of approximately $78.4 billion of their estimated 2010 net income of $80.9 billion to the U.S. Treasury. This represents a $31 billion increase in payments to the U.S. Treasury over 2009 – $47.4 billion of $53.4 billion of net income. The Fed credits the results primarily to increased interest income earned on securities holdings during 2010.

The Federal Reserve Banks' 2010 net income was derived primarily from $76.2 billion in income on securities acquired through open-market operations – federal agency and government-sponsored enterprise (GSE) mortgage-backed securities, U.S. Treasury securities and GSE debt securities – with $7.1 billion in net income from consolidated limited liability companies (LLCs) that were created in response to the financial crisis. An additional $2.1 billion in interest income was derived from credit extended to American International Group Inc., with an additional $1.3 billion of dividends on preferred interests in AIA Aurora LLC and ALICO Holdings LLC and $800 million in interest income on loans extended under the Term Asset-Backed Securities Loan Facility and loans to depository institutions.Â

Additional earnings were derived primarily from revenue of $600 million from the provision of priced services to depository institutions. The Reserve Banks had interest expense of $2.7 billion on depository institutions' reserve balances and term deposits.

Operating expenses of the Reserve Banks, net of amounts reimbursed by the U.S. Treasury and other entities for services the Reserve Banks provided as fiscal agents, totaled $4.3 billion in 2010.Â

SOURCE: Federal Reserve Board

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