Fed’s Crisis Investments Are Showing Big Returns

The Federal Reserve will deliver a record $78.4 billion to the Treasury from its investments last year, a 65 percent increase from the $47.4 billion it transferred in 2009, according to preliminary estimates released Monday.
"It's interest that the Treasury didn't have to pay to the Chinese," the Fed's chairman, Ben S. Bernanke, said, half-jokingly, during a Congressional hearing on Friday at which he offered a rough preview of the figures.
The transfer to the federal coffers is a byproduct of the ballooning Fed balance sheet, which now stands at nearly $2.5 trillion — nearly triple what it was at the end of 2007, when turmoil from the bursting of the housing bubble began to disrupt financial markets.
The Fed has been amassing assets in an effort to stimulate growth by holding down long-term interest rates. Short-term rates, which the Fed influences more directly, have been essentially zero for more than two years. Low long-term rates have made borrowing cheaper for corporations and households and have lifted securities markets, though unemployment remains stubbornly high.
 
Full story on New York Times: http://www.nytimes.com/2011/01/11/business/economy/11treasury.html?ref=business