Fed earns $77 billion from balance-sheet explosion

Fed earns $77 billion from balance-sheet explosion

By Steve Goldstein


March 20, 2012

WASHINGTON (MarketWatch) — The Federal Reserve and its district banks earned the second-highest amount in its history last year as the central bank profited from increasing its balance sheet to boost the U.S. economy.

The Federal Reserve and its district banks said Tuesday that it earned $77.4 billion, down from $81.7 billion in 2010.

The bumper earnings allowed the Fed to distribute $75.4 billion to the U.S. Treasury, also the second-highest level ever. Its balance sheet reached $2.92 trillion in 2011, up from $2.43 trillion in 2010.

The Fed said the earnings were derived primarily from $83.6 billion in interest income on securities acquired through open market operations, from Treasury securities, federal agency and government-sponsored enterprise mortgage-backed securities, and GSE debt securities.

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