Tags: U.S | Fed | Earned | Record | $45B | in 2009

U.S. Fed Earned Record $45B in 2009

Tuesday, 12 Jan 2010 08:16 AM


WASHINGTON – The US Federal Reserve turned a record profit of 45 billion dollars last year even as it plowed money into teetering banks to prevent a financial collapse, The Washington Post reported Tuesday.

The country's central bank played a pivotal role in propping up the US economy in the midst of the sharpest recession since the Great Depression, spending billions of dollars on a highly controversial bailout of financial institutions.

The Fed's unconventional moves led to a windfall for the government, the Post reported on its website, citing its calculations of figures it compiled from public documents.

It said the Fed will return 45 billion dollars to the US Treasury for 2009, the highest earnings in the 96-year history of the central bank. The largest previous refund was 34.6 billion dollars, in 2007.

The daily said the profits -- earned in large part from the Fed's aggressive bond-buying as it aimed to push down interest rates and stimulate growth -- were far higher than the expected profits of Bank of America, Goldman Sachs and JP Morgan combined.

The figures lend weight to claims by President Barack Obama's administration that the Fed has been largely successful in its drastic intervention in the US economy and the protection of the American public.

"This shows that central banking is a great business to be in, especially in a crisis," Vincent Reinhart, a former Fed official and current resident scholar at the American Enterprise Institute, told the Post.

"You buy assets that have a nice yield, and your cost of funds is very low. The difference is profit," Reinhart added.

In addition to the bonds, the central bank also made money on its emergency loans to banks and financial firms, some of which repaid billions of dollars in loans and interest payments in 2009.

The newspaper reported that Fed chairman Ben Bernanke has received a modest raise for 2010, bringing the annual salary of one of the most powerful figures in the United States to just 199,700 dollars, with no bonus.

That is in stark contrast to the multi-million-dollar compensation received by several top bank executives, and as major US banks gear up to announce annual bonuses for top executives while bracing for a political firestorm over compensation practices that critics say fueled the global financial crisis.

© AFP 2015

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

America's News Page
©  Newsmax Media, Inc.
All Rights Reserved