Fed Reserve Has Record Profits


Inquiring minds are looking at the Federal Reserve making record profits:

The profit, which is paid to the U.S. Treasury, is a 65% increase over last year’s payment of $47.4 billion, which was also a record. As the Fed’s balance sheet has more than doubled to about $2.4 trillion since the 2008 financial crisis, it has pumped about $125 billion back into the government’s coffers.

“This is, at this point, is a profitable program from the perspective of the federal deficit,” Fed Chairman Ben S. Bernanke told the Senate Budget Committee on Friday referring to the central bank’s wide-scale purchase of mortgage-backed securities and other assets, alluding to the final numbers formally released Monday.

However, the banks are still not lending. And, of course, everything is more expensive for you…but, hey, The Fed is profitable!

…for now:

But the Fed still could lose money on the huge amount of assets on its balance sheet when it starts selling them off in the coming years. Those assets include mortgage-backed securities from Fannie Mae and Freddie Mac, and assets purchased as part of the 2008 rescue of insurance giant American International Group and the Fed-engineered sale of Bear Stearns to JP Morgan Chase.

Senate Budget Committee Chairman Kent Conrad (D-N.D.) asked Bernanke Friday about the potential for large future losses for taxpayers when the Fed eventually reduces its balance sheet to historic levels.

“I don’t see that it’s likely,” Bernanke said. “And our records so far, not only in this program, but in all the lending and other special credit programs we’ve done … has been very positive from a perspective of returns to the Treasury.”

Hmmm…Bernanke says it’s not likely? Isn’t this the same man who didn’t see the downturn in real estate? Wasn’t he the same person who didn’t see the finacial markets locking up a few summers ago?

Sounds like ‘Captain Wrong’ is about to strike again?

We have, quite literally, wagered the house on Bernanke’s Bet.

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