“The increase was primarily due to increased earnings on securities holdings during 2009.” This is the rather mundane way in which the Federal Reserve, America’s central bank, explains a US$14.4bn increase in its latest annual profits.

Every year, the central bank transfers the bulk of its net income—earned via interest and dividends from the securities it holds—to the US Treasury. The amount the Fed paid the Treasury in 2009, US$46.1bn, is the largest annual transfer in the history of the bank.

Although the mountains of securities that the institution acquired in order to prop up ailing financial firms are useful earners for now, the central bank may not recoup its principal when it eventually offloads assets to shrink its US$2trn balance sheet. This may explain the low-key approach to its earnings announcement. As an observer notes in the LA Times, “Any other entity that had record profits would have hired a band or had a parade.”

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