Federal
Reserve pays government $88.9 billion . . . are we supposed to be grateful? . .
. ~J
by
MARTIN CRUTSINGER | Associated Press
WASHINGTON (AP) — The Federal Reserve paid
the federal government a record $88.9 billion in 2012.The central
bank earned the money from the Treasury bonds and
mortgage-backed securities it has purchased to drive interest rates lower and boost
the economy.
The Fed said Thursday that the 2012 payment was
up 17.9 percent from 2011 when it paid the federal government $75.4 billion. It
also surpassed the previous record payment of $79.3 billion made in 2010.
The Fed began buying Treasury bonds and mortgage
bonds during the last recession and has kept up the effort since the
downturn ended in June 2009 in an effort to boost the sub-par recovery and
lower high unemployment. It is currently purchasing $85 billion in bonds each
month.
Fed officials say the massive bond buying, known as
quantitative easing, is needed until economic growth is stronger. But critics
contend that the bond purchases could ultimately lead to higher inflation.
All of the Fed’s purchases have pushed the central bank’s
balance sheet to $2.92 trillion, more than three times the size of the Fed’s
holdings before the financial crisis struck in the fall of 2008.
The Fed is funded from interest earned on its portfolio of
securities. After covering its expenses, the Fed makes a payment of the
remaining amount to the Treasury Department. Before the Fed launched the first
bond buying program in 2008, its annual payments had averaged below $30 billion
for the previous three years.
The 2012 payment to the Treasury was reduced by
$387 million which went to fund the operations of the Consumer Financial
Protection Bureau and the Office of Financial Research, two new agencies
created by the 2010 Dodd-Frank Act which overhauled the government’s financial
regulations. Republicans opposed having these agencies receive their operating
funds from the Federal Reserve rather than going through the normal
appropriations process in Congress.
https://jhaines6.wordpress.com/2013/01/11/federal-reserve-pays-government-88-9-billion-are-we-supposed-to-be-grateful-j/
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