The Federal Reserve Banks’ 2011 net income came to $77.4 billion, which is said to have been derived primarily from $83.6 billion in interest income on securities acquired through open market operations. These include Treasury securities, federal agency and government-sponsored enterprise mortgage-backed securities, and GSE debt securities. Profits were high, but it looks like it was because of the securities held.
The Reserve Banks provided for payments of $75.4 billion of their 2011 net income to the U.S. Treasury.
Total Reserve Bank assets at the end of 2011 rose by $491 million over the end of 2010 to a level of $2.919 trillion. Here is the breakdown: U.S. Treasury securities increased by $683 billion, GSE debt securities holdings fell by $45 billion, and federal agency and GSE MBS holdings fell by $156 billion. The balances held under central bank liquidity swap arrangements rose by $99.7 billion.
The closing of the American International Group, Inc. (NYSE: AIG) recapitalization plan in January 2011 actually resulted in asset reductions of $47 billion.
JON C. OGG
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