Fed gave $46bn half-year profit to Washington

Ben Southwood
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THE FEDERAL Reserve gave a boost to the government’s balance sheet in the first half of the year, according to accounts released yesterday, whose unprecedented publication came after pressure to increase transparency following the credit crunch.

The US central bank generated $47.5bn profit in the six months to June, of which it gave $46.4bn to the federal government.

This profit came overwhelmingly from $16.6bn of income on mortgage-backed securities, and $23.4bn of revenue from interest on federal government debt.

The Fed agreed to publish more regular accounts last year after heavy pressure from Republicans including Mitt Romney.

This release came as investors and analysts looked forward to the Jackson Hole symposium of US central bankers, and its centrepoint: governor Ben Bernanke’s Friday speech.

Ahead of Jackson Hole, Chicago Fed president Charles Evans claimed yesterday that the Fed must expand the money supply further to boost employment.

Meanwhile, the Fed said it is considering delaying until September 2013 the requirement that medium-sized banks conduct annual stress tests.