Financial Update (First Quarter 2007)


Vol. 20, No. 1,
First Quarter 2007


FEATURES

Dennis Lockhart Named
Atlanta Fed President

Fed to Study Nation's
Payment Habits

Check 21 Continues
Brisk Growth

Atlanta Fed Joins
Poverty Research

Agencies Update Brochure
on Nontraditional Mortgages

Guidelines on Commercial
Real Estate Loans Issued

Bernanke Focuses on
Fed's Supervisory Role

New Atlanta Fed
Directors Named

$1 Presidential Coin
Program Begins

Fed Turns Money
Over to Treasury

Departments

Did You Know?

Data Bank

Circular Letters

Staff

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Reserve Banks Return Nearly $29 Billion to Treasury

As it does every year, in 2006 the Federal Reserve System transferred most of its net income to the U.S. Treasury. This transfer totaled more than $28.5 billion.

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Securities interest, commercial services generate income
These funds came primarily from three sources. The largest portion is interest on U.S. government securities the Federal Reserve holds in its portfolio. In 2006, this interest totaled $36.5 billion. The income that the Reserve Banks generated through fees for providing services such as payments processing for depository institutions contributed an additional $909 million. Another $477 million came mainly from earnings on foreign currency and loans.

As it does every year, in 2006 the Federal Reserve System transferred most of its net income to the U.S. Treasury. This transfer totaled more than $28.5 billion.

Tallying up
The operating expenses of the 12 Reserve Banks ($2.4 billion in 2006), the expenses of the Board of Governors ($301 million), and the cost of currency ($492 million) were deducted from Reserve Banks' total income. The cost of earnings credits granted to depository institutions totaled $277 million. The banks also deducted $159 million, largely from a decrease in the value of assets denominated in foreign currencies that were revalued at current exchange rates. After these deductions, the Federal Reserve Banks' 2006 net income was about $34.2 billion.

Board policy directs each Reserve Bank to transfer its yearly net income to the U.S. Treasury after paying dividends ($871 million in 2006) to Federal Reserve member banks and making adjustments necessary so that the surplus equals the capital that member institutions paid in ($4.771 billion in 2006).