Federal Reserve's balance sheet grows on MBS, Treasury securities
The Federal Reserve balance sheet shifted dramatically in 2010 as the central bank gobbled up Treasury securities and assets supported by mortgage loans. At Dec. 31, the Fed reported total assets of $2.43 trillion, up $193 billion from 2009, the Federal Reserve said in its consolidated 2010 financial report released Tuesday. The expanded balance sheet includes an $86 billion increase in mortgage-backed securities acquired from government-sponsored enterprises and federal agencies. The Fed also added $261 billion in Treasury securities in 2010. The Fed began purchasing Treasury debt late last year as part of its quantitative easing plan, or QE2, which extends through the summer. Under QE2, the Fed is reinvesting $600 billion of maturing securities into Treasury debt. Those additions to the balance sheet were partly offset by a $96 billion decline in loans to depository institutions and a $23 billion drop in loans extended under the Term Asset-Backed Securities Loan Facility, the Fed said. On a year-over-year basis, the Fed's income grew by $28 billion from 2009 levels, hitting $82 billion in 2010. The Fed attributes this increase to a $24 billion gain on earnings interest tied to MBS holdings. Write to Kerri Panchuk.