Wall St benefits from trading with Fed - report

NEW YORK, Aug 2 (Reuters) - Wall Street banks are reaping outsized profits by trading with the U.S. Federal Reserve, the Financial Times reported on Sunday, citing officials and industry executives.

That is raising questions about whether the central bank is driving hard enough bargains in its dealings with private sector counterparties, the paper said.

The Fed has emerged as one of Wall Street's biggest customers during the financial crisis, the Financial Times said, as it buys large amounts of securities to help stabilize the markets.

The paper cited an unnamed executive at a leading investment management firm saying, "You can make big money trading with the government .... The government is a huge buyer and seller and Wall Street has all the pricing power."

(Reporting by Megan Davies; Editing by Richard Chang)