The Fed Sent The Treasury 88 Billion in Profit

The Federal Reserve sent just over $88 billion in profits to the U.S. Treasury Department in 2020 (Wall Street Journal)

The Fed’s payments to the Treasury had fallen over the previous four years as interest rates rose, boosting the reserves it paid on deposits that private banks keep at the Fed’s regional reserve banks. The Fed also began shrinking its portfolio of assets, reducing its overall net income.

In 2020, the Fed lowered rates to near zero in response to the economic downturn wrought by the coronavirus pandemic, sharply reducing interest payments on banks’ excess reserves.