Reserve Banks Disburse $21 Billion to Treasury
As it does every year, in 2005 the Federal Reserve System transferred most of its net income to the U.S. Treasury. This transfer totaled more than $21 billion, representing 91 percent of the Fed’s net income.
Securities interest, commercial services generate income
These funds came primarily from two sources. The largest portion is interest on U.S. government securities the Federal Reserve holds in its portfolio. In 2005, this interest totaled $28.959 billion. The income that the Reserve Banks generated through fees for providing services such as payments processing for depository institutions contributed an additional $901 million. Another $386 million came primarily from earnings on foreign currency and loans.
The operating expenses of the 12 Reserve Banks ($2.193 billion in 2005), the expenses of the Board of Governors ($266 million), and the cost of currency ($477 million) were deducted from Reserve Banks’ total income. The banks also deducted $3.577 billion, largely from assets denominated in foreign currencies that were revalued at current exchange rates. After these deductions, the Federal Reserve Banks’ 2005 net income was $23.521 billion.
Board policy directs each Reserve Bank to transfer its yearly net income to the U.S. Treasury after paying dividends ($781 million in 2005) to Federal Reserve member banks and making adjustments necessary so that the surplus equals the capital that member institutions paid in ($1.286 billion in 2005).