The Ultimate Irony

The New York Times is reporting that the Federal Reserve bank earned in excess of $47 Billion as a result of the crash of the housing market:

The Federal Reserve transferred $47.4 billion, a record sum, to the Treasury Department last year, a result of the central bank’s actions to support the fragile housing market.

The transfer to the public coffers rose roughly 50 percent, or $15.7 billion, from $31.7 billion transferred in 2008, the Fed announced on Wednesday in releasing its annual financial statements, which were audited by Deloitte.

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

Unlike private banks, the Fed does not exist for the purpose of making a profit, though it inevitably does so. Historically, it paid no interest on the currency and bank reserves that represent its liabilities, while it made interest on theTreasury securities that make up its assets.

The Fed’s profitability increased as an incidental result of the financial turmoil that began in 2007.

To hold down long-term interest rates and support the housing market, the Fed greatly increased its holdings of Treasury securities and acquired mortgage-backed securities and debts owed by Fannie Mae and Freddie Mac, the mortgage-finance companies that are now controlled by the government. The Fed made $20.4 billion in interest on those mortgage-related securities and debt holdings in 2009.

Wall Street bankers make out like bandits, the Fed turns a profit on the backs of homeowners who lost out to Wall Street, and any income from all of this is rolled back in to the U.S, Treasury so our political leaders can spend it on more futile and illegal wars.

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