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January 11, 2021

The United States Federal Reserve Bank on Monday said it paid $88.5 billion in profits to the U.S. Treasury in 2020, a five-year high since 2015, according to a preliminary financial statement released Monday.

The figures show a $33.3 billion rise from 2019, a nearly two-thirds increase caused by $27.1 billion lower interest expense associated with reserve balances held by banks and a $5.3 billion decrease in interest expense associated with assets sold under agreements to resell.

The net income for 2020 mainly came from $100 billion in interest income on assets acquired through open market operations–treasury securities, federal agency and government-sponsored enterprise, mortgage-backed securities, and GSE debt securities, $723 million interest income on securities purchased under agreements to resell, realized gains of $664 million on GSE MBS, and foreign currency gains of $1.5 billion that result from the daily revaluation of foreign currency denominated investments at current exchange rates. 

The Reserve Banks made $405 million in net income from services established in response to the COVID-19 pandemic and had interest expense of $7.9 billion primarily linked with the reserve balances held by banks, and interest expense of $711 million on assets sold under agreement to repurchase.

The Federal Reserve’s operating expenses totaled $4.5 billion in 2020, net of amounts reimbursed by the Treasury and other institutions for services the Reserve Banks provided as fiscal agents.

The Banks also were assessed $831 million for the costs related to producing, issuing, and retiring currency, $947 million for Board expenditures, and $517 million to fund the operations of the Consumer Financial Protection Bureau. Additional earnings were derived from income from services of $448 million. Statutory dividends totaled $386 million in 2020. 

The audited financial statement will be published in March.

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