In a remark that may have been directed to those concerned about "transparency" at the Fed, Chairman Ben Bernanke said:
"I am pleased that an independent auditor has found that our financial statements present fairly, in all material respects, the financial position of the Federal Reserve. The information disclosed in the 2009 financial statements reaffirms our commitment to transparency and to the responsible stewardship of public resources."
The annual financial statements include information about the assets held by each of the consolidated LLCs (limited liability companies, known as Maiden Lane I, II, and III). The statements also contain summaries of the associated credit and market risk for each significant holding.
The Reserve Banks’ comprehensive income increased $17.9 billion over the previous year to $53.4 billion….The increase was primarily attributable to interest earnings on the Federal agency and GSE MBS holdings (and was) partially offset by a decrease of $3.8 billion in realized gains on the sale of Treasury securities and a decrease of $2.8 billion in interest income on loans to depository institutions.
The Reserve Banks transferred $47.4 billion of their $53.4 billion in comprehensive income to the U.S. Treasury in 2009, a $15.7 billion or 50 percent increase from the amount transferred in 2008.
Here is an excerpt from a related NY Times article:
Along with financial statements for the Fed’s board of governors in Washington and the 12 Fed district banks, the Fed released details about the assets held by five limited liability companies that were created by the Federal Reserve Bank of New York in response to the crisis.
Three of those companies, known as Maiden Lane I, II and III, were created to hold troubled assets, including mortgage-backed securities and collateralized debt obligations, acquired as a result of the government-brokered sale of Bear Stearns to JPMorgan Chase in March 2008 and the takeover of the American International Group, the stricken insurance giant, that September.
The Fed expects to recover the full value of the loans made to those special entities and does not expect any loss to taxpayers from them, senior Fed officials said in a conference call.
If the Fed does end up avoiding losses on these enterprises, then perhaps there is something to be said about the desirability of having a central bank operate as lender of last resort. (I would not have thought so even a year ago).