Federal Reserve Profit: Fed Earns Record $45 Billion In 2009

WASHINGTON (JEANNINE AVERSA -- AP) -- The Federal Reserve says it made a record profit of $46.1 billion last year as the central bank made money off its extraordinary efforts to rescue the country from the worst economic and financial crisis since the 1930s.

The windfall gets turned over to the U.S. Treasury.

It marks the biggest profit on records dating back to 1914 when the Fed was created. The previous record profit - of $34.6 billion - was registered in 2007. In 2008, the Fed reported a profit of $31.7 billion.

The Fed says the increase was primarily due to increase earnings on securities it held last year.

Comments

[fusionfan]

10:33 PM on 01/12/2010

I think this story does a disservice, since it is highly misleading.

The way the Fed "earns" the bulk of its money is, by "buying" Treasuries from the U.S. government. The government "sells" Treasuries to the Fed, and the Fed pays for them with money that the Fed creates out of thin air -- in effect, it adds the Treasuries to the deposit column of its member banks.

The Fed then collects the standard interest on these Treasuries that it has "bought", and then "returns" all of the interest, minus a contractually agreed upon convenience fee, to the government. The government is happy, because it effectively sold debt to the Fed, for which it pays only a nominal amount of interest, and the Fed is happy, because its banks get to lend out this money, plus the convenience fee, while small, is huge in terms of the actual amounts.

It's all a shell game. The author should educate, rather than print a misleading story.

[CologneCitizen]

03:50 AM on 01/13/2010

I agree the story is misleading.

But who cares ? I guess many Americans also think the Fed is somehow a part of the government because of the name Fed. As far as I know it is a private bank.

[vippy]

07:38 PM on 01/12/2010

And I bet not one dollar was honestly earned! Explain how they made that money and we go from there.

[Doug Compagner]

06:49 PM on 01/12/2010

Obama wants a windfall tax on oil companies and banks...how about on the federal reserve!

[joebhed]

07:54 PM on 01/12/2010

I do agree in spirit, but the Fed, by policy and not law, does return the bulk of its profits to the Treasury.
Lately they have talked about reducing or withholding those payments, so we'll see how much of the $45 LARGE we get back.

[nogimmicks]

06:45 PM on 01/12/2010

Poor Madoff went to jail for stealing a fraction of 50 billions. The Fed steals the public money in trillions using the powers of the government but without any accountability of transparency. That travesty must end.

[HoosierRadical]

06:41 PM on 01/12/2010

How can the FED "earn" money?

[kgb999]

12:34 AM on 01/13/2010

The old fashioned way, they STEAL it.

[blogisti]

05:11 PM on 01/12/2010

Have you noticed that all of the parties that are responsible for this Recession are making record amounts of profits. Do you think this benefit is an accident? Neither do I. Do you think anyone will be investigated? Neither do I? What now? There is nobody covering America's back.

[wdmax]

04:06 PM on 01/12/2010

I know this article might be new to some people, and for that reason this article serves its purpose. For other in the know this in not news at all , but business as usual. The Federal Reserve Bank can't help but make money. They are an exclusive financial institution that receives tax dollars in the form of interest just for printing our money. If the united states government printed our own money, not the Fed, then there would be not need to pay any financial institution interest.

Kill the Fed Reserve...

[Ihaveadream]

04:34 PM on 01/12/2010

Kennedy tried. On June 4, 1963 John F. Kennedy signed Executive Order No. 11110 that returned to the U.S. government the power to issue currency, without going through the Federal Reserve. Mr. Kennedy's order gave the Treasury the power "to issue silver certificates against any silver bullion, silver, or standard silver dollars in the Treasury." This meant that for every ounce of silver in the U.S. Treasury's vault, the government could introduce new money into circulation. Federal Reserve notes are not backed by anything. In all, Kennedy brought nearly $4.3 billion in U.S. notes into circulation.

With the stroke of a pen, JFK was on his way to putting the Federal Reserve Bank of New York out of business..... After Kennedy was assassinated just five months later, no more silver certificates were issued. That Executive Order was never repealed by any U.S. President through an Executive Order and is still valid.

So who has really been running this country then and now.
http://www.john-f-kennedy.net/executiveorder11110.htm

[Quinny]

01:41 AM on 01/13/2010

I have several of the Kennedy "Red Seal" $5 dollar bills. You can find them -
if you look - and would like to purchase a TRUE piece of history. The last REAL
money ever printed by the US Treasury, NOT the Federal Reserve.
If you look at the money in your wallet it reads: Federal Reserve Note.
On the "Red Seal" it reads: Treasury Note.

"Let Justice Be Done,
Though The Heavens Fall..."

[ThomastonPaine]

03:47 PM on 01/12/2010

Part 3: U.S. Rescue May Reach $23.7 Trillion, Barofsky Says (Update3)

The Treasury has spent $441 billion of TARP funds so far and has allocated $202.1 billion more for other spending, according to Barofsky. In the nine months since Congress authorized TARP, Treasury has created 12 programs involving funds that may reach almost $3 trillion, he said.

Treasury Secretary Timothy Geithner should press banks for more information on how they use the more than $200 billion the government has pumped into U.S. financial institutions, Barofsky said in a separate report.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM

thomastonpaine.com

The inspector general surveyed 360 banks that have received TARP capital, including Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. The responses, which the inspector general said it didn’t verify independently, showed that 83 percent of banks used TARP money for lending, while 43 percent used funds to add to their capital cushion and 31 percent made new investments.

Barofsky said the TARP inspector general’s office has 35 ongoing criminal and civil investigations that include suspected accounting, securities and mortgage fraud; insider trading; and tax investigations related to the abuse of TARP programs.

To contact the reporters on this story: Dawn Kopecki in Washington at [e-mail]; Catherine Dodge in Washington at [e-mail].

Last Updated: July 20, 2009 15:01 EDT

[ThomastonPaine]

03:46 PM on 01/12/2010

Part 2: U.S. Rescue May Reach $23.7 Trillion, Barofsky Says (Update3)

Barofsky’s estimates include $2.3 trillion in programs offered by the Federal Deposit Insurance Corp., $7.4 trillion in TARP and other aid from the Treasury and $7.2 trillion in federal money for Fannie Mae, Freddie Mac, credit unions, Veterans Affairs and other federal programs.

Treasury’s Comment

Williams said the programs include escalating fee structures designed to make them “increasingly unattractive as financial markets normalize.” Dependence on these federal programs has begun to decline, as shown by $70 billion in TARP capital investments that has already been repaid, Williams said.

Barofsky offered criticism in a separate quarterly report of Treasury’s implementation of TARP, saying the department has “repeatedly failed to adopt recommendations” needed to provide transparency and fulfill the administration’s goal to implement TARP “with the highest degree of accountability.”

As a result, taxpayers don’t know how TARP recipients are using the money or the value of the investments, he said in the report.

‘Falling Short’

“This administration promised an ‘unprecedented level’ of accountability and oversight, but as this report reveals, they are falling far short of that promise,” Representative Darrell Issa of California, the top Republican on the oversight committee, said in a statement. “The American people deserve to know how their tax dollars are being spent.”

[ThomastonPaine]

03:45 PM on 01/12/2010

PART 1:

U.S. Rescue May Reach $23.7 Trillion, Barofsky Says (Update3)
Share Business ExchangeTwitterFacebook| Email | Print | A A A By Dawn Kopecki and Catherine Dodge

July 20 (Bloomberg) -- U.S. taxpayers may be on the hook for as much as $23.7 trillion to bolster the economy and bail out financial companies, said Neil Barofsky, special inspector general for the Treasury’s Troubled Asset Relief Program.

The Treasury’s $700 billion bank-investment program represents a fraction of all federal support to resuscitate the U.S. financial system, including $6.8 trillion in aid offered by the Federal Reserve, Barofsky said in a report released today.

“TARP has evolved into a program of unprecedented scope, scale and complexity,” Barofsky said in testimony prepared for a hearing tomorrow before the House Committee on Oversight and Government Reform.

Treasury spokesman Andrew Williams said the U.S. has spent less than $2 trillion so far and that Barofsky’s estimates are flawed because they don’t take into account assets that back those programs or fees charged to recoup some costs shouldered by taxpayers.

“These estimates of potential exposures do not provide a useful framework for evaluating the potential cost of these programs,” Williams said. “This estimate includes programs at their hypothetical maximum size, and it was never likely that the programs would be maxed out at the same time.”

ThomastonPaine.com

[ThomastonPaine]

03:43 PM on 01/12/2010

This claim of a profit for the Fed by Mr. Bernanke and numerous others is an incredibly perplexing claim? The Fed, the Treasury, the Administration and much of the media keep touting the amount of the bailouts of the financial system by the TARP figure of 700 billion? However the real amount of the numerous ongoing bailouts, according to Neil Barofsky, Special Inspector General for the Treasury’s Troubled Asset Relief Program is closer to 23.7 TRILLION DOLLARS?

How can Mr. Bernanke possibly clain a profit for the FED? If Mr. Bernanke is restricting his claim of 46 billion in profits to just the modest payback of TARP funds in a form of accounting tunnel vision, what of the missing 23 Trillion? Even if Special Inspector General Barofsky was off on his estimation of 23.7 Trillion by as much as say 50%, what then of the approximate 11 Trillion missing?

"US Rescue May Reach 23.7 Trillion"
http://www.bloomberg.com/apps/news?pid=20601087&sid=aY0tX8UysIaM

ThomastonPaine.com

*I feel that this Bloomberg Article is so important, and so at odds with what is presently being reported that I'm going to paste it in its entirety in 2 following parts:

[Johndinca]

03:39 PM on 01/12/2010

Why does our government have to ask permission to look at its own checkbook? Something its never done, audit the Fed. Isn't it OUR money? And, why do we have to pay interest for borrowing our OWN money? Isn't the Fed a government run bank? No, its not and the government has absolutely no authority over it according to Alan Greenspan on PBSs News Hour in Sept of 2007 he said "Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take."

http://www.youtube.com/watch?v=pVmxQsvj6lo

Don’t defend the ridiculous status quo just because you like Obama. I like him too but this isn't about Republican or Democrat etc. Its much bigger than that.

[rf-hawaii]

04:18 PM on 01/12/2010

The Fed is in control of our money supply and we aren't allowed to ask them what they're doing.

Unless Congress creates laws to change things.

The Federal Reserve system is corrupt, always has been.

[lgg]

03:22 PM on 01/12/2010

google: The Money Masters

and spend the next 2 hours of your life having your MIND BLOWN.

i think this movie is easily 20 years old and it delineates to a T what has happened in our monetary system in the past 3 years.

[Johndinca]

03:42 PM on 01/12/2010

That one is really good. I also really like "Money as Debt" which you can watch online.

[rf-hawaii]

04:19 PM on 01/12/2010

Yes, please educate yourselves and urge others to do the same.

Otherwise the horrible system will never be changed.

[direct democracy]

02:51 PM on 01/12/2010

President Obama: Nationalize the Federal Reserve and create our own money:

http://www.thirdworldtraveler.com/Banks/Nationalize_Fed_Zerlenga.html

[direct democracy]

02:49 PM on 01/12/2010

Secrets of the Federal Reserve:

http://www.thirdworldtraveler.com/Banks/Secrets_Federal_Reserve.html

[rf-hawaii]

04:22 PM on 01/12/2010

Tell the president we want this fixed, here:

http://www.whitehouse.gov/contact/

Everyone please take a moment to do so.