Fed Made $47.B in ’09
By Barry Ritholtz - April 22nd, 2010, 6:20AM
Its good to be the central bank:
“The Federal Reserve transferred $47.4 billion, a record sum, to the Treasury Department last year, a result of the central bank’s actions to support the fragile housing market.
The transfer to the public coffers rose roughly 50 percent, or $15.7 billion, from $31.7 billion transferred in 2008, the Fed announced on Wednesday in releasing its annual financial statements, which were audited by Deloitte.”
Now if only they would release those damned AIG emails . . .
Source:
Federal Reserve Made $47.4 Billion in 2009
SEWELL CHAN
NYT, April 21, 2010
http://www.nytimes.com/2010/04/22/business/economy/22fed.html
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April 22nd, 2010 at 8:26 am
“Its good to be the central bank”
oh I know I’d be sleeping like a baby if I were running THAT balance sheet.
Really though, after all the Fed has done, should we ask, is 47b….big?
April 22nd, 2010 at 8:28 am
ZIRP is a policy of THEFT to guarantee a profit for banks and improve profit margins for borrowere in general. The victims are the responsible savers and fixed income investors in our society. Pensions and endowments cannot meet their future investment return needs on the fixed income allocation in portfolios. The poster children for this ZIRP of theft are grandma and grandpa whose income on CD’s has been cut more than 50%
Greenspan is widely ridiculed (rightly so) for feeding the bubble by holding short rates at 2% for 2 years. How can anyone think that Helicopter Ben is not creating his one bubble monster with 0% interest for 18 months. With the 25 basis points per meeting hike policy, the Fed won’t even get back to 2% until mid 2011.
My partner was flapping his gums yesterday about fantastic earnings report this quarter. How do earnings look if we 1. Exclude Financials 2. Compare to average earnings instead of the weakest quarter of the recession 3. Adjust for interest rate expense manipulated down by the ZIRP of the Fed
I would love to see some numbers of interest rate expense for non-financials and how lower interest rates have been a major component of earnings recovery.
April 22nd, 2010 at 8:42 am
Cynic -
About the Fed, I couldn’t agree more
April 22nd, 2010 at 8:48 am
Why not just print $$ and give it to the Gov’t? Why can’t The Fed buy Treasuries directly, and then pay entire interest back to the Treasury? Why do they allow to transfer TAXPAYERS’ money to Primary Dealer banks???
Hey, Fed, do you know that I’m getting screwed here twice? First time is when i get 0.5% on my savings account, down from 4%+ a few years ago. The second time is when I’ll have to pay tax to pay for the interest on the Treasuries that will flow directly to the big banks. I’m sure you, The Fed, know that. You’ve actually designed that system. Hey, I have collateral too – my house. But you won’t lend me at 0.25%, right? So really Fed is part of the government that is not “for, of and by the people” but for the big banks. Is that constitutional? I don’t know. But i wish there was a politician that said “Let’s blow up the Fed” I mean literally, evacuate the people and drop a f***ng bunker-buster, and never build anything in its place. Keep the rubble as a reminder for future generations….
April 22nd, 2010 at 8:52 am
“…the Fed announced on Wednesday in releasing its annual financial statements, which were audited by Deloitte.”–from snip, above
O, Really?
then, what of: “Victoria McGrane Victoria Mcgrane – Mon Nov 30, 5:19 am ET
“…He’s got everyone from South Carolina Republican Sen. Jim DeMint to Minnesota moderate Democrat Collin Peterson to California liberal Barbara Boxer on his side in his audit-the-Fed crusade. He’s drawing liberal support in his push to rein in the cost of the war in Afghanistan. Senate candidates like Democratic Rep. Paul Hodes of New Hampshire are finding Dr. No’s populist economic anger to be useful in the campaign, echoing Paul’s criticism of the Federal Reserve.
Even Financial Services Committee Chairman Barney Frank (D-Mass.) is delivering backhanded compliments, taking credit for merely allowing a vote on Paul’s amendment to audit the central bank.
This convergence of odd bedfellows, and the economic angst that’s driving it all, is yet another signal that President Barack Obama is going to have more and more trouble keeping his traditional Democratic allies on his side as the economic debate continues. It seems that everyone is looking for something new to latch on to in the economic debate — even if those ideas belong to one of the more eccentric members of Congress.
“This brought people together [from] the whole political spectrum, from progressives and liberals and libertarians and conservatives. … they all came together. That, to me, is what is really so important,” said Paul, who has been introducing his audit-the-Fed measure since the early ’80s.
After so many tries, this time Paul’s measure attracted 313 co-sponsors in the House, representing every possible point on the political spectrum. It also scored a strong vote in a key committee and has a companion in the Senate that’s supported by a bipartisan coalition of senators…”
http://news.yahoo.com/s/politico/20091130/pl_politico/29986
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=audit+the+fed
are We to assume that 313 U.S. Representatives, at the minimum, are, totally, “out to lunch”?
or, should We know quality Disinfo/Agitprop when We see it?
“All the News, That’s Fit to Print”, Yes, no kidding..
“…The New York Times’s masthead logo, “All The News That’s Fit to Print,” dates back to 1896, the first year of Ochs-Sulzberger family control of the paper, and both the family control and arrogant belief in the benevolence and superior judgment of the dominant owners persist to this day. The 1997 Proxy Statement of The New York Times Company explains the special voting rights that assure family control in terms of the desire for “an independent newspaper, entirely fearless, free of ulterior influence and tinselfishly devoted to the public welfare.”
The paper’s independence, however, and the century-long accretion of influence and wealth by the owners, has been contingent on their defining public welfare in a manner acceptable to their elite audience and advertisers. In the 1993 debate over the North American Free Trade Agreement (NAFTA), for example, the Times was aggressively supportive of the agreement, and solicited its advertisers to participate in advertorials with a letter touting the “central importance…of this important cause” and the need to educate the public on NAFTA’s merits, which polls showed that most citizens failed to appreciate. As the paper regularly takes positions on domestic and foreign policy issues within parameters acceptable to business and political elites, it is evident that the owners have failed to escape class, if not selfish, interests in defining public welfare and what’s fit to print….”–By Edward S. Herman
http://www.thirdworldtraveler.com/Herman%20/AllNewsFit_Herman.html
April 22nd, 2010 at 9:56 am
Reading through the article you see that the increase of 50% in transfers to the Treasury came on increasing the balance sheet 2.5 times. Would have hoped for a little more juice off those toxics.
April 22nd, 2010 at 10:00 am
Oh look, I just made up a whole lotta money, isn’t that a gas!
April 22nd, 2010 at 10:22 am
So where did all that money come from? Printed out of thin air? Looks like another scheme to transfer wealth from savers to bankers and politicians.
April 22nd, 2010 at 11:04 am
Thanks to ZIRP stealing money from me by reducing interest on savings to a pittance, I’ll be paying less Federal income tax and the financial execs will be paying more tax.
Time for another tax cut for the overburdened high “earners”.
April 22nd, 2010 at 11:23 am
“…the Fed announced on Wednesday in releasing its annual financial statements, which were audited by Deloitte.”–
Here’s a question for all the financial brainpower around here.
In determining the Fed’s $47B profit it transferred to the Treasury, did the Fed have to value its assets using mark-to-market accounting?
April 22nd, 2010 at 11:43 am
Barry wrote:
“Now if only they would release those damned AIG emails . . . ”
Screw the AIG-related stuff … that’s chump change. What I want to know is: What kind of MBS garbage did they buy with that $1.25 trillion, who did they buy it from, and what did they pay relative to par?
Folks talk about how much money taxpayers may end up losing (or gaining, if you believe the housing-reflationists) on TARP or the Fed’s Maiden Lane bailout-shell-companies… make no mistake, it’s the MBS-related purchases where the *real* bailouts – and the real eventual loss to the taxpayer – reside.
-E
April 22nd, 2010 at 11:47 am
Did they publish the audit? I’m wondering how they valued the $1.25T in toxic mortgages they have purchased over the past couple of years … or if the audit even went beyond the income statement.
Of course, due to the demise of the mark-to-market version of FASB 157, they could have valued the toxic mortgages at face value — at least until they reach the end of their terms — with missed/defaulted loan payments being shown as an asset, payments that they “expect to receive”.
April 22nd, 2010 at 1:38 pm
BR, could you explain all of this to us, slowly? Start with, what is the Federal Reserve’s source of money? Doesn’t the Federal Reserve effectively have the power to print money? So if that is true…what does it mean that the Federal Reserve transferred $47 billion to the Treasury? It appears to us mere mortals out in the sticks that after the Fed printed $1.25 trillion to buy junk mortgage paper at par, they then decided to print an extra $0.047 trillion and give it to the Treasury so it could also print a nice press release.
I am so thankful they chose to do that. Truly gods’ work.