WASHINGTON -- The Federal Reserve made a record profit of $46.1 billion last year, reflecting money made off its extraordinary efforts to rescue the country from the worst economic and financial crisis since the 1930s, the central bank announced Tuesday.
The windfall gets turned over to the Treasury Department.
It marks the biggest profit on record dating back to 1914 when the Fed was created. The previous record profit -- of $34.6 billion -- was registered in 2007. In 2008, the Fed reported a profit of $31.7 billion.
The Fed says the bigger profit was primarily due to increased income from the securities it held last year.
Such income went up as the Fed's holdings of securities mushroomed.
The Fed launched several securities-buying programs last year to help revive the economy. Its goal is to drive down rates on mortgages and other consumer debt.
Under one program that ended last year, the Fed snapped up $300 billion worth of government debt. Under another program, the Fed is on track to buy $1.25 trillion in mortgage securities from Fannie Mae and Freddie Mac, and an additional $175 billion in debt issued by the mortgage giants. Those programs have boosted the value of securities held by the Fed.
The Fed faces a risk, however. The Fed could lose money if the central bank had to sell those securities and their prices were to fall. The Fed might need to sell the securities to sop up some of the unprecedented amount of money pumped into the economy during the crisis.
The Fed is funded from the interest earned on it vast portfolio of securities. It is not funded by Congress.
After covering its expenses, the Fed gives what is left over to the Treasury Department.