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Banking

Reserve Banks Return Nearly $90 Billion to U.S. Treasury

US Treasury buildingIn 2012 the Federal Reserve System transferred most of its net income to the U.S. Treasury. The 2012 transfer totaled $88.9 billion.

Securities interest, commercial services generate income
The following list shows the primary components of the Federal Reserve Banks' 2012 net earnings:

  • $80.5 billion in earnings on securities acquired through open market operations (U.S. Treasury securities, government-sponsored enterprise [GSE] debt securities, and federal agency and GSE mortgage-backed securities)
  • $13.3 billion from realized gains on the sale of U.S. Treasury securities
  • $6.1 billion attributable to the consolidated limited-liability companies that were created in response to the financial crisis

The Reserve Banks had interest expenses of $3.9 billion on depository institutions' reserve balances and term deposits.

The income that the Reserve Banks generated through fees for providing services such as payments processing for depository institutions contributed an additional $450 million.

Tallying up
The operating expenses of the 12 Reserve Banks totaled $3.7 billion in 2012. In addition, the Reserve Banks were assessed $1.2 billion for the cost of new currency and Federal Reserve Board expenditures and $387 million to fund the operations of the Bureau of Consumer Financial Protection and Office of Financial Research.

Federal Reserve Board policy directs each Reserve Bank to transfer its yearly net income to the U.S. Treasury after paying statutory dividends ($1.6 billion in 2012) to Federal Reserve member banks and making adjustments necessary so that surplus equals paid-in capital ($461 million in 2012).

January 28, 2013

 

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