NEW YORK - Federal Reserve Banks assets rose $491 billion in 2011 to $2.919 trillion, and their net income for the year was $77.4 billion, $75.4 billion of which went to the Treasury, the Federal Reserve announced Tuesday in the release of the 2011 combined annual comparative financial statements for the Federal Reserve Banks.
The income, the Fed said in a release, “was derived primarily from $83.6 billion in interest income on securities acquired through open market operations (Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities).”
The banks’ holdings of U.S. Treasury securities rose $683 billion, GSE debt securities holdings fell $45 billion, and federal agency and GSE MBS holdings slid $156 billion. The balances held under central bank liquidity swap arrangements rose $99.7 billion.
Assets related to credit and liquidity programs dropped $95.8 billion. “The closing of the American International Group, Inc. (AIG) recapitalization plan in January 2011 resulted in asset reductions of $47 billion, inclusive of the full repayment of the revolving line of credit with AIG in the amount of $20.6 billion and the redemption or sale of the Federal Reserve Bank of New York’s (FRBNY) preferred interests in two AIG-related LLCs in the amount of $26.4 billion,” the release noted.
“Investments held by the [the limited liability companies that were created to respond to strains in financial markets] consolidated by the FRBNY decreased by $33 billion, primarily as a result of asset sales and maturities, and these proceeds were used to repay $32.3 billion of the loans extended by the FRBNY to the LLCs. In addition, loans outstanding under the Term Asset-Backed Securities Lending Facility decreased by $15.8 billion, as a result of principal payments and loan prepayments,” according to the release.