WASHINGTON (AP) — The Federal Reserve said Friday it paid the federal government $77.7 billion in 2013. That was down from the record set in 2012 but still far above payment levels before the Great Recession.
The payments reflect a portion of the earnings the central bank makes from the Treasury bonds and mortgage-backed securities it has bought to drive interest rates lower to boost the economy.
The Fed is funded from interest earned on its portfolio of securities. After covering expenses, the Fed makes a payment of the remaining amount to the Treasury Department. The preliminary estimate for the 2013 payment was down 12 percent from a payment of $88.4 billion made in 2012.
Fed payments averaged $26 billion annually in the four years before 2008. But since 2008, the Fed's balance sheet has increased four-fold and now tops $4 trillion.
The Fed decided at its December meeting to make a modest reduction in the amount of bonds it purchases each month to keep downward pressure on interest rates. It said it would cut the monthly purchases from $85 billion to $75 billion beginning this month and would make further reductions in coming months if the economy keeps improving.
In releasing a preliminary accounting of its finances Friday, the Fed said that expenditures for the operations of the Fed board totaled $580 million in 2013 and that another $563 million went to fund the Consumer Financial Protection Bureau and the Office of Financial Research, two agencies created by Congress in 2010 as part of an overhaul of the government's financial regulatory efforts in the wake of the 2008 financial crisis.