Reserve Bank net income jumped nearly 22% in 2021; CFPB transfers up 21.5%

Federal Reserve Banks had net income of $107.8 billion in 2021, a $19.3 billion increase (21.8%) from the previous year; the Federal Reserve Board said the net income bump came mostly from a $25.1 billion increase in interest income associated with U.S. Treasury securities.

In releasing the Reserve Bank income and expense data Friday, the Fed also reported that it transferred $628 million to fund the operations of the Consumer Financial Protection Bureau (CFPB) and $970 million for Federal Reserve Board expenditures. The transfer to the CFPB was up 21.5% from 2020 (when $517 million was transferred, according to Fed data).

Fed Board expenditures, according to Fed data, were also up from 2020, by $23 million (2.4%).

Drivers of net income in 2021 were U.S. Treasury securities, federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS), and GSE debt securities of $122.4 billion, the Fed said. Net income was offset, the agency said, by interest expense associated with reserve balances held by depository institutions of $5.3 billion, foreign currency revaluation losses of $1.9 billion, and interest expense of $414 million on securities sold under agreement to repurchase.

The Fed also said the Reserve Banks realized net income of $275 million from facilities established in response to the COVID-19 pandemic.

In addition, the income interest increases on securities, the Fed said, was offset by decreases in interest income on federal agency and GSE MBS of $2.7 billion; and a decrease of $3.4 billion in the annual amount of net gain or loss that results from the daily revaluation of foreign currency denominated asset holdings at current exchange rates.

The Fed said 2021 audited Reserve Bank financial statements are expected to be published later this year and may include adjustments to the preliminary unaudited results released Friday.

Federal Reserve Board announces Reserve Bank income and expense data and transfers to the Treasury for 2021