Posted on 01/15/2024 9:12:01 AM PST by ChicagoConservative27
The Federal Reserve quietly lost a fortune in 2023 as interest it pays out to banks swamped the interest it earns on its bond portfolio, data released by the central bank Friday showed.
The Fed said it lost roughly $114.3 billion in 2023, its largest-ever annual loss.
The losses occurred because the money the Fed pays banks for reserves held at the central bank exceeded the interest earned on the mortgage bonds it holds. The Fed has been raising the interest rate paid on reserves alongside the hikes on the benchmark federal funds rate to stem the worst inflation in forty years.
(Excerpt) Read more at breitbart.com ...
Does the Fed still own a boat load of Mortgage Backed Securities…because those would be rupturing value if “marked to market.”
As long as the Fed can (virtually) print as much of the stuff as it wants, does it ever truly “lose money”?
To answer my own question: “ US Assets - Mortgage-Backed Securities Held by All Federal Reserve Banks is at a current level of 2.432T, unchanged from 2.432T last week and down from 2.641T one year ago.”
Ouch. Those are costing the Fed billions of dollars in lost value if they had to price them like a company.
It’s a back door bailout of the banks.
What a joke!
There is no such thing as the fed losing money. How can you lose money when you can make all you want?
If a real bank were to be that much in the hole there would be an immediate run on the bank, like it happened with Silicon Valley Bank last year. Is there a run on the Federal Reserve BANK?
And who are the depositors? Commercial banks. Do you see any of them pulling the money out of the fed? Of course not, they know they’re fully covered.
It’s all a charade!
They still own about $2.4 trillion of MBS.
They already mark to market.
They do price them like a company. They are losing billions.
The Fed is going bye bye.
They lose money when they earn 3% on their bonds while they pay banks 5% on their reserves. They also lose because those bonds are worth less.
LOL!
This article is about the Fed’s operating losses, which are a separate issue entirely.
Yes but it’s just pretend book keeping with monopoly money.
So, tell me, what are the dire consequences of such an epic “loss”?
The depositors (commercial banks) sure ain’t losing sleep over it? They love it, they keep getting 5.5% risk free on the huge reserves they have at the fed.
There’s a lot more money supply than ever, so everything is a record in hard numbers. Meaningless.
“They love it, they keep getting 5.5% risk free on the huge reserves they have at the fed.”
So am I, on T-Bills. This isn’t a problem.
As long as the Fed can (virtually) print as much of the stuff as it wants, does it ever truly “lose money”?
______________________________________________________
Nope they can’t...They only exist to manage the money supply. They could literally forgive the Federal government of all its bond payments (interest and principal), and not lose a minutes sleep over it.
The Federal Reserve:
1. Its not Federal
2. It has no reserves
Not dire. The Fed turns over their profit to the Treasury. They'll have none to turn over this year, or any year, until they make up for this loss.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.