Fed soothes U.S. debt burden in 2013 to the tune of $77.7 billion

WASHINGTON Fri Jan 10, 2014 10:40am EST

The facade of the U.S. Federal Reserve building is reflected on wet marble during the early morning hours in Washington, July 31, 2013. REUTERS/Jonathan Ernst

The facade of the U.S. Federal Reserve building is reflected on wet marble during the early morning hours in Washington, July 31, 2013.

Credit: Reuters/Jonathan Ernst

WASHINGTON (Reuters) - The Federal Reserve pumped $77.7 billion into the U.S. Treasury last year, in part by returning interest payments made by the government on bonds held by the central bank.

The figure published by the Fed on Friday illustrates one way the central bank's extraordinary support for the economy has also eased America's fiscal burden.

The Fed's balance sheet has ballooned over the last four years to nearly $4 trillion as it bought debt securities to lower interest rates and spark a faster economic recovery.

An improved economy has helped the Treasury to collect more in tax receipts, while U.S. taxpayers also get more direct support by effectively getting back part of the interest payments they make on the national debt.

The Fed holds about $2.2 trillion in U.S. Treasury debt, which is just over half of the central bank's securities holdings and a significant chunk of the federal government's $17.3 trillion debt.

The Fed's profits last year derived from $90.4 billion in interest income on the securities in its portfolio of U.S. government debt and bonds related to the housing industry.

The Fed normally returns profits to the Treasury, but its remittances have jumped since it began buying massive amounts of debt to fight the 2007-09 recession. The Fed returned about $368 billion to the Treasury between 2009 and 2013, up from $135 billion during the prior five years.

(Reporting by Jason Lange; Editing by James Dalgleish and Chizu Nomiyama)

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