Fed Generates Record Profits of $46.1 Billion in 2009

No recession for Federal Reserve.

The U.S. Central Bank had a stellar year in 2009, generating a record net income of $52 billion, of which it paid a record profit of $46.1 billion to the U.S. Treasury, the Washington Post reported.

The payment to the Treasury Department is the largest on record dating back to 1914 when the Fed was created. The previous record profit — of $34.6 billion — was registered in 2007.

The report said much of the Fed’s earnings were primarily due to increased income from the securities it held last year.

“By the end of 2009, the Fed owned $1.8 trillion in U.S. government debt and mortgage-related securities, up from $497 billion a year earlier,” WaPo said. The effort helped to keep mortgage and other long-term interest rates low as the central bank sought to help the economy recover from the worst financial crisis in decades.

The Fed’s 2009 profit marks a 47% increase over 2008, easily topping the expected profits of Bank of America (BAC), Goldman Sachs (GS) and J.P. Morgan Chase (JPM) combined.

Even as the Fed comes to resemble private banks in terms of its balance sheet and its earnings power, notes WaPo, there remains one big difference. “The CEO of the Federal Reserve, Chairman Ben S. Bernanke, received only a modest cost-of-living raise for 2010, despite the record earnings: He now makes $199,700, with no bonus at all.”

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