US Fed makes $14 billion from bailouts: report
01 Sep 2009
The US government has actually profited from the global financial collapse as the US Federal Reserve is reported to have made a profit of $14 billion from the distress loans to the fallen financial giants and other institutions, in the last two years.
The UK-based Financial Times said that the Federal Reserve based the profit estimate on the difference between the fees and interest on the lending facilities and the interest it would have earned had it invested the funds in three-month Treasury bills.
The US central bank also earned about $19 billion from interest and fees to institutions that availed the liquidity facilities during the global financial crisis, the paper added.
Had the Federal Reserve to invest the same amounted loaned out in three-month Treasury bills, it would have earned an estimated $5 billion only in interest, leaving out the $14 billion gain since August 2007.
However, these figures do not include company-specific bail-outs and purchases of long-term assets, the report said.
It said that the Federal Reserve's calculations have neither been audited, published nor risk-adjusted but only deals with its liquidity facilities.
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