The Federal Reserve will pay a record $88.9 billion to the U.S. Treasury as part of an annual dividend it remits after covering its own expenses from interest on its $2.92 trillion balance sheet and other gains.
Most of the 2012 estimated net income of $91 billion was from $80.5 billion in interest on assets purchased to reduce lending costs under the so-called quantitative easing program, the Fed said today in a statement in Washington. Other earnings were from selling Treasury securities and income from companies created during the financial crisis, the Fed said.
The central bank has expanded its holdings by purchasing $2.3 trillion in Treasury debt, mortgage-backed securities and housing agency debt to push down longer-term interest rates after cutting the benchmark rate to near zero four years ago. Total assets on the central bank’s balance sheet as of Jan. 2 were near the record $2.94 trillion level from February.
Earnings from each reserve bank are given to the Treasury after the Fed covers its operating costs and dividend payments, according to the central bank’s statement today. The final results showing valuations as of the end of last year will be included in the annual audited financial statements and the Board of Governors’ Annual Report.
The estimated payment for 2012 is almost triple the $31.7 billion that the central bank remitted in 2008. The Fed distributed $75.4 billion to the Treasury in 2011 and $79.3 billion in 2010, up from a remittance of $47.4 billion in 2009.
Operating expenses for the district banks were $3.7 billion last year after reimbursements from the Treasury and other agencies, the Fed said today. Reserve banks paid their member institutions $1.6 billion in dividends last year, an amount set by law.