Massive Federal Reserve Profit Of $78.4 Billion In 2010

I guess you can make good by doing good.

The Federal Reserve has been intervening massively into the economy, in particular by buying mortgage bonds.

I was surprised to find that the Federal Reserve made an impressive profit by so doing.

The Los Angeles Times says:

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.”

Based on the Fed’s valuation of its assets, the central bank is in the black on its investments. Most of the Fed’s income came from the purchases of mortgage-backed securities and U.S. Treasury securities. The Fed said it also earned $2.1 billion in interest from credit extended to AIG, as well as $1.3 billion in dividends from holdings in AIG subsidiaries AIA Aurora and ALICO Holdings.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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