Spokane7
62°
April 21, 2010 in Nation/World
Taxpayers got even bigger windfall from Fed
WASHINGTON — Taxpayers got a record $47.4 billion last year from the Federal Reserve, new documents released Wednesday showed.
The payment to the Treasury Department is slightly higher than the $46.1 billion first estimated in January. The new figure is based on more complete information contained in audited financial statements for the Fed’s 12 regional banks and related units.
The amount handed over to Treasury last year is $15.7 billion more— or a 50 percent increase — from 2008, the Fed says.
The bigger windfall to taxpayers reflects gains from the Fed’s efforts to fight the financial crisis and revive the economy. Critics have worried that the Fed’s actions could put taxpayers at risk by reducing the amount turned over to Treasury coffers.
The Fed is funded from the interest earned on it vast portfolio of securities. It is not funded by Congress. After covering its expenses, the Fed gives what is left over to the Treasury Department.
The previous record payment turned over to Treasury — $34.6 billion — occurred in 2007.
Interest earned from the Fed’s portfolio of mortgage securities came to $20.4 billion last year, one of the factors behind the record payment last year. The Fed had bought mortgage securities from Fannie Mae and Freddie Mac to lower mortgage rates and bolster the housing market. The program — a centerpiece of the Fed’s efforts to turn around the economy — ended last month.
Going forward, however, the Fed faces a risk on its big holdings of mortgage securities. It could lose money if it had to sell those securities after their prices had fallen. At some point when the economic recovery is firmly entrenched, the Fed might need to start selling some of the securities to sop up money it pumped into the economy during the crisis.
Two programs the Fed set up during the crisis to ease credit clogs, along with assets it took over with the bailouts of Bear Stearns and American International Group in 2008, generated net earnings of $5.6 billion last year. That marked a turnaround from the net loss of $1.7 billion in 2008.
Of those two crisis-era programs, one involved strengthening the commercial paper market, a crucial short-term financing mechanism companies rely on to pay for everything from salaries to supplies. The other was designed to spur more lending to consumers and small businesses. Virtually all of the Fed’s crisis-era programs have wound down. The one program still in place, which aims to aid the troubled commercial real-estate market, will shut down at the end of June.
Obama honors Medal of Freedom recipients as heroes 
Another_Perspective on April 21 at 5:28 p.m.
If we got a windfall, then how come everyone is losing their house, job and on unemployment and our country is in debt up to Obama’s ears?
spokanada on April 21 at 6:37 p.m.
Thanks Obama.
Another perspective. would you rather have higher taxes??? Your negativity is disgusting.
liarsinnews on April 21 at 8:08 p.m.
The story is the biggest shell game I`ve ever witnessed in my life. The liars are telling lies to the liars. I have seen so much in my life of over 80 years that now I feel sorry for the generations to come because of the reckless spending habits. Its very sad.
johnclarke on April 22 at 8:47 a.m.
spokanada; as much as it pains me to admit, those particular bailouts were initiated under the Bush administration. That is a nice return to the taxpayer (The Fed is required by law to return all profits after expenses to the Treasury) but let us hope the rest of the Fed’s holdings perform. Other good news on GM. Although it will be years before we see our entire investment, think of the jobs that were saved. This move to bail out the auto industry, although bitter tasting - was smart.
http://www.washingtonpost.com/wp-dyn/content/article/2010/04/20/AR2010042005443.html
johnclarke on April 22 at 9:02 a.m.
Looking back on some comments from the republican leader…guess we’ll be waiting for his apology.
The only thing it makes clear is that the government is firmly in the business of running companies using taxpayer dollars,” said House Republican Leader John Boehner of Ohio.
“Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multinational corporation to economic viability? It’s time for the administration to fully explain what the exit strategy is to get the U.S. government out of the board room once and for all,” Boehner said.
chump on April 22 at 5:00 p.m.
The author of this Associated Propaganda article failed to mention just one thing- There is interest on that money from the “heroic” fed res.
Reminder- the Fed Res Note (incorrectly called a “dollar”) is a promissory NOTE (an IOU) from the FR.
Reminder- The Treasury *could* have printed up some slick IOUs itself to trade to the FR. These IOUs are called T-Bills.
What the author failed to mention is that while the FR and the UST are busy enhancing the credibility of their IOUs, there remains interest to be paid that does not exist (and therefore an increase in the “money supply” is needed to pay the interest- a perpetual system of debt).
May I suggest watching - http://www.youtube.com/watch?v=Cd-SLRyuRq0 for a philosophical illumination of the paper world.