Fed hands over $77 billion to Treasury

WASHINGTON, Jan. 10 (UPI) -- The U.S. Federal Reserve said its second most lucrative year ever resulted in payments to the Treasury Department of $76.9 billion in 2011.

The Fed's portfolio has swelled enormously since the financial crisis took hold in 2008. As such, it is now the largest single holder of federal debt and mortgage-backed securities handled by the Federal Home Loan Mortgage Corp., known as Freddie Mac, and the Federal National Mortgage Association, known as Fannie Mae.

More than 95 percent of the Fed's profits come from interest payments on these holdings, The New York Times reported Tuesday.

As such, the money flows from the Treasury to the Fed and back again. But, as Fed Chairman Ben Bernanke quipped in a hearing last year, "It's interest that the Treasury didn't have to pay to the Chinese."

In 2010, the Fed sent $79.3 billion in profits to the Treasury Department. Before that, the mandated donation was far smaller. It averaged $23 billion per year in 2001 through 2006, before the financial crisis and $54 billion in 2007 through 2011, the Times said.