Fannie Mae and Freddie Mac may not be costing taxpayers as much they think. The Federal Reserve reported a record payout to the Treasury Department Monday, as its profits were boosted by government-sponsored entity securities it purchased during the financial crisis. Income from these investments totaled roughly one-half of the $148 billion cost of Fannie and Freddie while in conservatorship. But FTN Financial analysts believe the Fed profits from the $1 trillion in mortgages it bought through 2009 show that estimates on the total cost to taxpayers from the GSEs may be overblown. "GSE profits on those loans would have been much lower as they would have hedged better, but previous GSE credit losses were always absorbed to some degree by the profits generated by a steep curve that followed the Fed's efforts to restore economic growth," said Jim Vogel of FTN. "If the GSEs hadn't bought the MBS, banks would have stepped in to earn the carry and pay taxes on the profits." The Fed said Monday that most of the $76.2 billion in income came from investments in these securities. While FTN says costs aren't as high for the GSEs as thought, they are not exactly profit-making machines for the Fed. As investment bank Keefe, Bruyette & Woods notes, they are still subject to the ebb and flow of the market and are still generating losses. While prepayments on these securities did slow in December on rising interest rates, they still remain elevated at 25.6% for Fannie and 28.5% for Freddie, according to KBW. Still, Vogel said with this much revenue from the government's investments, lawmakers and taxpayers will hopefully keep clearer heads as GSE reform nears. "For all the fuss and headlines that will accompany discussions of GSE reform this year, taxpayers have not suffered to the degree they've been lead to believe," Vogel said. Write to Jon Prior. Follow him on Twitter: @JonAPrior