Fed pays out $78.4 billion to Treasury on 2010 investments

Most of the income the Fed paid to the Treasury came from securities it purchased on the market, including mortgage-backed securities. Those investments yielded $76.2 billion in 2010.

The Fed is currently in the process of buying $600 billion more of Treasury bonds in a “quantitative easing” effort. Fed officials hope buying up the Treasury bonds will help lower rates and boost private lending. But the policy has been criticized primarily by Republicans who contend it will lead to higher inflation.

The Fed also reported that it paid $2.1 billion in interest income on credit offered to American International Group, Inc., the insurance firm that obtained substantial government support in the midst of the financial crisis.

The Fed’s policy dictates that after covering its own costs, it pays out the remainder to the Treasury.