The U.S. Treasury has earned a $14 billion profit from short-term loans it made to banks and securities firms during the financial crisis, officials reported. The profit represents the difference between the $19 billion the Fed earned in fees and interest on the loans and the $5 billion it would have earned had it simply invested the money in short-term Treasury bills.
The profit figure does not include gains or losses on toxic securities the Fed bought from financial firms, including assets purchased as part of the bailouts of failed securities dealer Bear Stearns and insurer AIG. The federal government could still face losses on those assets when it sells them to private investors.
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