Fed turns record profits over to Treasury
(Reuters) - The Federal Reserve reported its earnings jumped by more than 50 percent in 2010 to a record $80.9 billion on its massive holdings of securities, and it is turning the bulk of it over to the U.S. Treasury Department.
The $78.4 billion that the Fed is remitting to Treasury is also a record and is $31 billion more than a year earlier. In 2009 the Fed had net income of $53.4 billion.
The Fed's portfolio has ballooned to $2.16 trillion, roughly triple its size before the financial crisis, as it purchased securities including U.S. government debt and mortgage-linked bonds in a move to drive down borrowing costs and stimulate the economy.
"The increase was due primarily to increased interest income earned on securities holdings during 2010," the U.S. central bank said in releasing preliminary unaudited results. Audited results will be issued in the spring and may show some changes, Fed officials indicated.
After driving overnight interest rates close to zero percent in December 2008, the Fed bought $1.7 trillion of longer-term Treasury and mortgage-related bonds as a supplement to its pledge to keep overnight rates near zero for a long time.
It followed that up late last year with a new $600 billion bond-buying program -- again intended to spur growth by pumping liquidity into the economy. That program ends at mid-year.
The Fed turns over profits to the Treasury annually and has never posted a loss. But the central bank took a number of extraordinary actions during and after the 2007-2009 financial crisis that critics say may have left it with some poor-quality holdings.
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Fed to complete $600 bln bond buy, Fisher says
(Reuters) - The U.S. Federal Reserve Bank will likely complete its latest round of Treasury purchases aimed at boosting the recovery, one of the U.S. central bank's most consistent inflation hawks said on Monday.
"I expect that program to be carried through," Dallas Fed President Richard Fisher told the Wall Street Journal in an interview, referring to the Fed's plan to buy a total of $600 billion in long-term Treasury securities through June.
But Fisher added that he "wouldn't be terribly keen" on expanding the program with further purchases given the recent growth the U.S. economy.
http://www.reuters.com/article/idUSTRE7095O520110110
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QE2 helpful and likely to remain: Fed officials
(Reuters) - The U.S. Federal Reserve's $600 billion bond-buying program helped solidify a shaky economic recovery and looks increasingly set to run its course, three top Fed officials indicated on Monday.
Atlanta Federal Reserve Bank President Dennis Lockhart, who voted for the controversial program on November 3, said he remained comfortable with that decision.
Minneapolis Fed President Narayana Kocherlakota and Dallas Fed President Richard Fisher, both of whom become voting members of the Fed's interest-rate policy committee this year, said the U.S. central bank was unlikely to cut short its bond-buying plan.
The measured endorsements of the plan, known as quantitative easing, or QE2, came as Fed presidents began laying out their policy positions for the year ahead and as recent data increasingly show the battered U.S. economy is slowly recovering.
Lockhart said QE2 had a role in that rebound.
"(T)he economy seems to have gained durable momentum as we begin 2011," he said in comments prepared for delivery on Monday.
"While things are looking better, I don't expect a quick fix," Lockhart added in a nuanced assessment that also highlighted some "powerful constraining" headwinds.
http://www.reuters.com/article/idUSTRE7095YM20110110
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DB here. This is the tale of 2010, as 2011 is already not looking nearly as positive for the Fed's balance sheet as rising rates on Treasuries are causing paper losses leading to questions from Senators...
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And this one is a classic...
New Slideshow - Time Magazine Looks Inside the Private Offices of Fed Chairman Bernanke
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Jan 14, 2011 at 12:32 AM
Reader Comments (3)
(Reuters) - The U.S. Federal Reserve's $600 billion bond-buying program helped solidify a shaky economic recovery and looks increasingly set to run its course, three top Fed officials indicated on Monday.
Atlanta Federal Reserve Bank President Dennis Lockhart, who voted for the controversial program on November 3, said he remained comfortable with that decision.
Minneapolis Fed President Narayana Kocherlakota and Dallas Fed President Richard Fisher, both of whom become voting members of the Fed's interest-rate policy committee this year, said the U.S. central bank was unlikely to cut short its bond-buying plan.
The measured endorsements of the plan, known as quantitative easing, or QE2, came as Fed presidents began laying out their policy positions for the year ahead and as recent data increasingly show the battered U.S. economy is slowly recovering.
Lockhart said QE2 had a role in that rebound.
"(T)he economy seems to have gained durable momentum as we begin 2011," he said in comments prepared for delivery on Monday.
"While things are looking better, I don't expect a quick fix," Lockhart added in a nuanced assessment that also highlighted some "powerful constraining" headwinds.
http://www.reuters.com/article/idUSTRE7095YM20110110
(Reuters) - The U.S. Federal Reserve Bank will likely complete its latest round of Treasury purchases aimed at boosting the recovery, one of the U.S. central bank's most consistent inflation hawks said on Monday.
"I expect that program to be carried through," Dallas Fed President Richard Fisher told the Wall Street Journal in an interview, referring to the Fed's plan to buy a total of $600 billion in long-term Treasury securities through June.
But Fisher added that he "wouldn't be terribly keen" on expanding the program with further purchases given the recent growth the U.S. economy.
http://www.reuters.com/article/idUSTRE7095O520110110
http://www.reuters.com/article/idUSTRE70D2BM20110114
Now how are they going to they spend all that money.....
http://blogs.reuters.com/columns/2011/01/13/dimon-should-keep-jpmorgans-powder-dry-for-now/
Does this remind everyone of other notable families... Think Shoes.
http://www.time.com/time/magazine/article/0,9171,961002,00.html
[snip].... ; )
The parable of Imelda's shoes has something to teach. She could never wear them all. Nor could the Marcos family, one suspects, manage to spend the billions of dollars they plundered from the Philippines. As easily could Khedive Ismail labor through his harem of 3,000 women. (It is perhaps just as well that Ismail's champagne overdose spared him the exhaustion of trying to scale that particular Everest.)