The Fed’s Annual Earnings Increase
It’s earnings week — and the Federal Reserve system is offering up details on its 2009 balance sheet.
The bank notes that though the total value of its assets “did not change significantly,” the composition of those assets changed dramatically. The bank shed $1.3 trillion in central bank liquidity swaps, loans and commercial paper. But it increased its holdings of mortgage-backed securities by $919 billion, “to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally.” (For reference, U.S. housing assets are worth $16.7 trillion, according to the Federal Reserve. Their value peaked at $22.9 trillion in 2006.)
The Fed’s overall earnings increased to $53.4 billion — including a surprising $20.4 billion in earnings on its mortgage-backed securities, many of which the Fed gained through its bailouts of AIG and Bear Sterns. Those assets were took a loss in 2008.