Several weeks ago, with little to no press coverage, the Federal Reserve released its audited financial statements. Readers don’t need a background in finance to fathom the mind-boggling numbers required to operate America’s Central Bank. A highlight from the press release:
Operating expenses were $8.7 billion in 2021, including assessments of $2.6 billion for Board expenses, currency costs, and the operations of the Consumer Financial Protection Bureau.
It’s difficult to pinpoint the most egregious line item on the financial statements, but operating expenses are a contender. On page 4, line items reveal salaries and benefits of $3.792 billion followed by a pension cost of just under a billion. Given the Federal Reserve System employs over 20,000 people, that’s an average salary of $189,600. However, employee salaries are miniscule compared to the Board of Governors operating expenses and currency costs, which come in at $2 billion. How the seven-member Board spends two billion dollars is known to only a few, including the auditor KPMG. No disclosure notes or further explanations are in the statements regarding Board of Governors expenses. But there is absolutely no benefit to the public by keeping disclosure of the $2 billion confidential.
$628 million went to the Bureau of Consumer Financial Protection (BCFP), a government agency which claims dedication to ensuring consumers are treated fairly by banks, lenders and other financial institutions. The BCFP is hardly a household name, but in 2017, President Obama said:
This agency was Elizabeth’s idea, and through sheer force of will, intelligence, and a bottomless well of energy, she has made, and will continue to make, a profound and positive difference for our country.
According to Senator Elizabeth Warren’s website, she created the organization because:
In 2008, greedy financial institutions crashed our economy and working families all across this country paid the price.
Her website says nothing, however, of the Federal Reserve’s role in crashing the economy in 2008.
The statements disclosing the annual Dividends on Capital Stock came in at $583 million. This is questionable since it’s a dividend paid to the same commercial banks the Fed regulates. It’s common for an industry to pay the regulator, not vice versa. Given the countless perks the financial sector receives from the Fed, scrapping the annual dividend would be more of a symbolic gesture since half a billion isn’t that much money considering the size of the Fed’s operations.
After all expenses have been paid:
Remittances to the U.S. Treasury were $109.0 billion in 2021, as compared to $86.9 billion in 2020.
The Fed’s gross income was $122.555 billion. Approximately $13 billion was spent on expenses such as salaries, dividends, interest to banks and other remittances.
$109 billion paid to the treasury should in no way constitute a win for the American people. Nearly 100% of the Fed’s income is derived from just two revenue sources: $92.610 billion from interest on US Treasuries and $29.619 billion on interest from Mortgage-Backed Securities (MBS).
Troubling to say the least, since the optimal amount of US Debt and MBS the Federal Reserve should own is zero. A more anti-capitalist story could never be written, even if written by Marx himself. Unfortunately, this is the price we are forced to pay living under a central banking system.
