The Federal Reserve Board (Fed) announced that the Reserve Banks provided for payments of approximately $97.7 billion of their estimated 2015 net income to the U.S. Treasury. The Fed also transferred $19.3 billion from Reserve Bank capital surplus on Dec. 28, 2015, which was the amount necessary to reduce aggregate Reserve Bank surplus to the $10 billion surplus limitation in the Fixing America’s Surface Transportation Act (FAST Act).
The FAST Act requires that aggregate Federal Reserve Bank capital surplus not exceed $10 billion, with the surplus being used to help fund federal transportation initiatives.
In previous years, the net income – or profits – sent to the Treasury had risen from $29.1 billion in 2006, $47.4 billion in 2009 and $79.6 billion in 2013.
“The Federal Reserve Banks’ 2015 estimated net income of $100.2 billion was derived primarily from $113.6 billion in interest income on securities acquired through open market operations (U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities),” the Fed stated.
The Reserve Banks were assessed $689 million for the costs related to producing, issuing and retiring currency; $705 million for Board expenditures and $490 million to fund the operations of the Consumer Financial Protection Bureau (CFPB).
Operating expenses of the Reserve Banks, net of amounts reimbursed by the U.S. Treasury and other entities for services the Reserve Banks provided as fiscal agents, totaled $3.9 billion in 2015. The Reserve Banks also had interest expenses of $6.9 billion associated with reserve balances and term deposits held by depository institutions, recorded foreign currency translation losses of $1.4 billion (which result from the daily revaluation of foreign currency denominated asset holdings at current exchange rates) and incurred interest expenses of $248 million on securities sold under agreement to repurchase.
Additional earnings were derived from income from services of $432 million. In 2015, statutory dividends totaled $1.7 billion and $778 million of net income was transferred to surplus.