Thread: It’s time for the Federal Reserve to give back taxpayer dollars

It’s time for the Federal Reserve to give back taxpayer dollars

By Jonathon M. Trugman
December 5, 2015 | 7:45pm

Last week in her congressional testimony, Fed chief Janet Yellen protested giving back to the US taxpayer what is ours.

For years now, the Fed has socked away billions and billions in profits that it has earned on its $4.5 trillion portfolio — so much so that as of Nov. 25, the Federal Reserve surplus account totaled $29.3 billion.

The Fed, like other government entities, is supposed to send its net profits to the US Treasury.

But the Fed, which has a license to print money, somehow has been permitted to keep this account and grow it massively.

In addition to the Fed’s surplus account, it has been lining the pockets of banks by paying above-market dividends to them each year.

In order for nationally chartered banks to be members of the Federal Reserve System, they must pay 6 percent of their capital to their regional Federal Reserve bank.

Problem is, as rates moved down (thanks to the Fed’s doings), the dividend remained 6 percent.

Congress fixed this Thursday with the passing of a five-year, $305 billion highway bill. The bill will allow for a one-time draw of $19 billion from the Federal Reserve’s surplus account.

And it adjusts the Fed’s dividend rate to mimic yields on the 10-year Treasury bond.

Yellen, responding to a question in testimony about the topic, said, “This concerns me … I think financing federal fiscal spending by tapping the resources of the Federal Reserve sets a bad precedent and impinges on the independence of the central bank. It weakens fiscal discipline.”

Actually, this is the definition of fiscal discipline. Returning surplus to Treasury to pay the people’s bills — in this case, the highway bill — is discipline in its most exact form.

Taking some of the capital from a surplus account at the Fed is paying the taxpayer back.

http://nypost.com/2015/12/05/its-tim...payer-dollars/

Congress approves $305 BILLION highway bill