Federal Reserve to Return $76.9 Billion to U.S. Treasury from 2011 Profit

The Federal Reserve will pay $76.9 billion to the U.S. Treasury as part of an annual dividend it pays out after covering its own expenses from interest on its ballooning bond portfolio and other gains.

This represents the second highest amount paid to the Treasury in history.

The central bank earned the money from investments made to strengthen the U.S. economy.

The Federal Reserve says the that the 2011 payment is down from an all-time record of $79.3 billion made in 2010.

A big part of the decline stems from lower earnings the Fed made from its support for insurance giant American International Group.

Total assets on the Federal Reserve’s balance sheet stood at a near-record $2.92 trillion on January 4.

The central bank expanded its portfolio by purchasing $2.3 trillion in U.S. Treasury debt, mortgage-backed securities, and housing agency debt to push down longer-term interest rates once its benchmark lending rate dropped to zero in December 2008.

The Fed expanded its portfolio in two rounds of asset purchases, known as quantitative easing.

Fed officials say such unconventional efforts are necessary until economic growth becomes stronger.

Critics have charged that those purchases could ultimately contribute to higher inflation.

Related articles

• The Federal Reserve Is Secretly Bailing Out Europe (VIDEO) (blippitt.com)
• ‘Maximum Fraud’ in U.S. Treasuries Market: Opinion (thestreet.com)
• China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills (globaltechfirm.wordpress.com)
• Fed Now Largest Owner of U.S. Gov’t Debt – Surpassing China (therepublika.com)