Accessibility links

Breaking News

US Federal Reserve Makes Record Profits in 2009

The U.S. central bank made a record profit in 2009 due to earnings it accrued through emergency measures aimed at saving the economy from crisis.

In a preliminary report released Tuesday, the U.S. Federal Reserve said it will turn over $46.1 billion to the federal government. That money comes from income the central bank received mostly from its investments in U.S. Treasury bonds and mortgage-related securities.

The Federal Reserve also made money from loans to banks and other firms.

The bank's profits follow an unprecedented amount of spending in emergency investments. At the end of 2009, the bank was holding more than $1.5 trillion in U.S. government debt and mortgage-related assets.

After paying operating costs, the Federal Reserve turns over all profits to the U.S. Treasury. It returned $34.6 billion in 2007.

In addition to the central bank's efforts, the Treasury Department set up a $700 billion program, known as TARP to assist troubled financial firms.

A White House official says the Obama administration is now considering charging banks a fee in order to recoup an estimated $120 billion dollars it expects to lose from the program.

It is not clear what type of fee the administration is considering.

In another development, the federal agency that insures deposits in U.S. banks is considering charging a new fee to punish banks that reward risk-taking.

The Federal Deposit Insurance Corporation board voted Tuesday to seek public comment on the proposal, the first step in a long rule-making process.

The proposed fee is intended to discourage banks from giving bonuses to employees who pursue short-term financial gains with insufficient regard for long-term risks.