Fed's Earnings Rise 50% In Crisis

It's not something we think about in normal times, but the Federal Reserve is a profit center, of a sort. The Fed just announced its annual distribution of "comprehensive income" to the U.S. Treasury -- they're not exactly earnings, but the idea is close enough -- and they rose to $47 billion in 2009, up 50 percent from a year earlier. The Fed had a busy year bailing out the world financial system, and it's great to see such a jackpot come back to taxpayers.

My personal favorite Fed product
I'm joking, mostly: the Fed's earnings represent the interest income and securities gains on the zillions of bank assets the central bank stood up to buy in its bold efforts. And since the Fed has low financing costs -- remember, it prints the money -- most goes to the bottom line.

Lately the Fed has started paying interest to banks on their reserves, but still they earned $63 billion of interest income, and incurred just $5 billion of interest expense and loan restructuring charges.

There were about $6 billion of other expenses, about half of which was salaries. And of course the Fed does not pay income taxes. Here's the income statement, for you numbers fans -- see page 3.

"Central banking is a great business," joked Vincent R. Reinhart, a former director of monetary affairs at the Fed, in the Times.