Fed profits from emergency lending

Federal Reserve building

TEXT OF STORY

Steve Chiotakis: The Federal Reserve may still be on the hook for hundreds of billions of dollars in aid used to stabilize the U.S. financial system. But for some of those investments, the Fed may be making out quite well. Here's Marketplace's Sam Eaton.


Sam Eaton: The central bank has so far landed a $14 billion profit from some of its emergency lending programs. These programs were set up to inject cash into the banking system when the mortgage crisis caused short-term lending between banks to grind to a halt.

And the Financial Times says the interest and fees the Fed has collected on those loans far exceeds what it would have made had it invested the money in U.S. Treasury bills. The hint of federal profits for a program aimed at preventing further economic collapse is a welcome sign for many critics of the federal bailout program.

But it's far from certain whether it will last. As bank-to-bank lending recovers, the profitability of the Fed's emergency lending measures has also declined. And then there's the hundreds of billions of dollars in money used to bail out Bear Stearns and insurance giant AIG -- money that may never see a profit.

I'm Sam Eaton for Marketplace.

About the author

Sam Eaton is an independent radio and television journalist. His reporting on complex environmental issues from climate change to population growth has taken him all over the United States and the world.

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