Federal Reserve’s Profits Projected to Fall

By law, the profits of the Federal Reserve are limited to 6%. Every dime over that goes right to the U.S. Treasury. Lately that’s been a big fat wad of cash, since — frankly — it’s just about impossible for a central bank to lose money.

Obama’s latest budget projects that the Fed’s payment to the Treasury will decline sharply over the next few years:

Fed deposits will reach a record estimated $79.5 billion in the fiscal year ending Sept. 30 before declining 53 percent through fiscal 2015 to $37.4 billion, according to the budget released today. The central bank’s annual remittances averaged $33.3 billion from fiscal 2007 through 2009.

The central bank’s increased payments reflect income from $2.3 trillion in mortgage and Treasury securities it’s purchasing as part of efforts to revive the economy after the worst financial meltdown in seven decades. Declining payments would reflect higher short-term interest rates in a “much stronger” economy that’s generating more tax revenue, Fed Chairman Ben S. Bernanke said last week.

The administration’s budget estimates Fed deposits of $65.8 billion on fiscal 2012; $47.4 billion in 2013; $38.2 billion in 2014; $37.4 billion in 2015; and $41 billion in 2016.

Less money from the Fed means that everyone would be doing better.

Posted by on February 14th, 2011 at 11:03 am


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