Who says the Federal Reserve isn't good for something? They just made $80.9 billion dollars in 2010.
The Federal Reserve Board on Monday announced preliminary unaudited results indicating that the 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 $31.0 billion increase in payments to the U.S. Treasury over 2009 ($47.4 billion of $53.4 billion of net income). The increase was due primarily to increased interest income earned on securities holdings during 2010.
On the other hand, what they made the money on are securities from Freddie Mac and Fannie Mae, or GSEs, U.S. Treasuries and those infamous mortgage backed securities or toxic assets them purchased.
Since the mortgage market imploded in 2007, the government has dramatically expanded its support of the housing market. You might think that the so-called recovery would change that, and the private sector would start taking some of the mortgage market back from the federal government. You would be wrong.
This little tidbit from the Fed almost slipped through without notice yesterday.
The Federal Reserve purchases fixed-rate, non-callable, senior benchmark securities issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Prior to August 31, 2009, purchases were focused on off-the-run securities in that category. Going forward, purchases will include on-the-run securities in that category. This change represents a technical adjustment designed to mitigate market dislocations and to promote overall market functioning. Over the course of the program, the Federal Reserve may change the scope of purchasable securities.
It was only a month ago that the Fed was monetizing treasury notes via the back door.
What does this imply just saddling the deficit in such rapid succession when the United States already is running on fumes due to bad policy and a absurdly expensive war?
Here's a laugh, just a couple of months ago the CBO was horrifying people that the bail out would cost $25B and they even claimed there was a 50% change that money would not be needed.
Who says the Federal Reserve isn't good for something? They just made
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