Federal Reserve posted record profit of $78.4 billion last year

LA Times
January 10, 2011

Fedchart2 The Federal Reserve announced Monday it made a record $78.4 billion profit in 2010 as the central bank's unprecedented intervention into the financial system continued to produce a side benefit to the federal government.

The profit, which is paid to the U.S. Treasury, is a 65% increase over last year's payment of $47.4 billion, which was also a record. As the Fed's balance sheet has more than doubled to about $2.4 trillion since the 2008 financial crisis, it has pumped about $125 billion back into the government's coffers.

"This is, at this point, is a profitable program from the perspective of the federal deficit," Fed Chairman Ben S. Bernanke told the Senate Budget Committee on Friday referring to the central bank's wide-scale purchase of mortgage-backed securities and other assets, alluding to the final numbers formally released Monday.

But the Fed still could lose money on the huge amount of assets on its balance sheet when it starts selling them off in the coming years. Those assets include mortgage-backed securities from Fannie Mae and Freddie Mac, and assets purchased as part of the 2008 rescue of insurance giant American International Group and the Fed-engineered sale of Bear Stearns to JP Morgan Chase.

(More here.)