Fed projects $80.2 billion payment to Treasury for 2017

FILE - This Friday, June 19, 2015, file photo shows the Marriner S. Eccles Federal Reserve Board Building in Washington. The Federal Reserve says the payments it will make to the federal government based on its 2017 operations will drop to $80.2 billion, down 12.3 percent from 2016. (AP Photo/Andrew Harnik, File)

WASHINGTON — The Federal Reserve said Wednesday the payments it will make to the federal government based on its 2017 operations will drop to $80.2 billion, down 12.3 percent from 2016.

It will be the second year that the payments have declined although they still remain about three times higher than the level in effect before 2008, when the Fed began a massive expansion of its bond holdings.

After covering its own operating costs, the Fed sends the Treasury its remaining profits each year, money that is used to lower the government's budget deficit.

The Fed said higher interest payments to banks on their reserves were a major reason for the drop in payments to the government. The $80.2 billion is preliminary and may change slightly when final results are released in March.

Based on the preliminary figures, the Fed said it earned $80.7 billion in net income in 2017, a drop of $11.7 billion from 2016. That decline reflected an increase of $13.8 billion in interest payments the Fed made to banks which was partially offset by an increase of $2.5 billion in the interest income the Fed earned on its holdings of Treasury bonds and mortgage-backed securities.

The Fed said operating expenses for the Fed system, which covers 12 regional banks, totaled $4.1 billion in 2017. In addition the 12 regional banks were assessed $724 million to cover costs related to producing and issuing currency. In addition, the Fed's payments to fund the operations of the Consumer Financial Protection Bureau totaled $573 million.

The Fed's bond holdings increased five-fold to $4.5 trillion starting in late 2008 as the central bank engaged in three rounds of bond purchases aimed at lowering long-term interest rates to help the country emerge from the Great Recession.

Starting last October, the Fed has been gradually trimming its bond holdings by not re-investing a portion of its maturing securities. But the holdings still total $4.4 trillion, far above the levels in effect before the 2008 financial crisis hit.

Must Read

Image of Asia: Watching the Ganges overflow in Allahabad

Aug 19, 2016

Image of Asia: Indians stand on the roofs of their submerged houses and look at the flooded Ganges...

How to get ready for your VW payout

Aug 25, 2016

VW's proposed settlement in the wake of its diesel scandal is complicated but owners can get an...

Mylan launching cheaper, generic version of EpiPen

Aug 29, 2016

The maker of EpiPens will start selling a cheaper, generic version of the emergency allergy shots...

European ships rescue thousands of migrants off Libyan coast

Aug 29, 2016

Italian naval ships along with vessels from non-government groups rescue thousands of migrants off...

Ask Brianna: Should I ask for more money at my first job?

Aug 30, 2016

Negotiating a higher salary is expected and encouraged, even at your first full-time job, and...

People also read these

AP witnesses rescue of migrants off Libya, 4 bodies found

Aug 18, 2016

A Spanish aid group rescued more than 100 migrants Thursday from three separate migrant boats off...

Image of Asia: Developing football skills in Pyongyang

Aug 24, 2016

Image of Asia: Youths play with a ball during a break at Pyongyang International Football School in...

How to get ready for your VW payout

Aug 25, 2016

VW's proposed settlement in the wake of its diesel scandal is complicated but owners can get an...

Russia downplays conflict with US over Syria weapons report

Aug 25, 2016

Russia's UN ambassador said Thursday there doesn't have to be a confrontation with the United...

Olympic champions Raisman, Hernandez feted by hometowns

Aug 28, 2016

Thousands of people have welcomed medal-winning Olympic gymnasts Aly Raisman and Laurie Hernandez...

Weather, 20 December
Houston Weather
+7

High: +11° Low: -2°

Humidity: 83%

Wind: NNE - 7 KPH

Canberra Weather
+27

High: +27° Low: +17°

Humidity: 87%

Wind: W - 20 KPH

Roissy-en-France Weather
+6

High: +6° Low: -5°

Humidity: 87%

Wind: ENE - 7 KPH

Florence Weather
+9

High: +9° Low: +6°

Humidity: 97%

Wind: ENE - 17 KPH

Parga Weather
+7

High: +16° Low: +4°

Humidity: 100%

Wind: SE - 25 KPH