Fed cuts estimate of 2011 payment to government

[March 21, 2012]  WASHINGTON (AP) -- The Federal Reserve is slightly cutting its estimate of how much it paid the federal government in 2011. But the bank says the payment is still the second biggest in the nation's history.

The Fed said Tuesday that it paid the federal government $75.4 billion last year. That's down from January's preliminary estimate of $76.9 billion.

The money comes from earnings on investments the central bank made to bolster the U.S. economy.

The payment is down from an all-time record of $79.3 billion made in 2010. The decline partly reflects lower earnings that the Fed made from its support for insurance giant American International Group.

The Fed began buying Treasury bonds and mortgage-backed securities during the recession and 2008 financial crisis to try to lower long-term interest rates.

[Associated Press]

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