Business bloggers are cautiously positive about news that the Federal Reserve earned $45 billion in 2009. The figure comes amid discussion of commercial banks' bonus plans and possible taxes to recoup government bailout losses--but as pointed out by The Washington Post's Neil Irwin, the Fed figure "will dwarf those of the large banks, easily topping the expected profits of Bank of America, Goldman Sachs, and J.P. Morgan Chase combined." With a few quips about Fed bonuses, economic pundits are interrogating the startling sum, analyzing how it was earned, and predicting what it means for the Fed and the government as a whole.

• 'One More Bank's Record Earnings,' jokes Barry Ritholtz. He points out the three revenue sources: (1) "the Fed aggressively buying bonds ... Bonds strongly rallied as the Fed sent interest rates to zero," (2) "interest income on paper ... The central bank also aggressively acquired higher yielding junk paper--non-investment grade--much of it festooned with sub-prime losses. This business line represents potential losses in the future," and (3) "emergency loans to banks and others, along with programs to prop up credit card lending, auto loans, and other consumer and business lending."
  

• Is This Really That Impressive? "Remember," says Chris Ryan of Americablog, "that the US government invested trillions to keep this industry afloat." He suggests $45 billion in earnings pales in comparison to $700 billion in investments. Furthermore, "we still don't know how much the losses will be for AIG but it will almost certainly turn out to be a loss."

• Good News, decides Reuters's Felix Salmon, although he notes the possibility of later credit losses for the bank. "It wasn't at all obvious, at the beginning of 2009, that the Fed was going to have such a banner year. So let's file this one--along with the lack of bonuses at the Fed--under 'happy' for the time being."

• Changing White House Policy and Fed Role? "The Administration," recalls 24/7 Wall St.'s Douglas McIntyre, "recently raised the prospects of a large tax on banks to cover losses taxpayers may have taken on bank aid including the TARP." Yet "the Fed's numbers raise the issue of whether the government has already profited substantially from its bailout activity." The profit, writes McIntyre, will go to the Treasury to help lower the deficit, and while lessening the likelihood of a bank tax also raises the possibility "that the Fed could potentially be a near-permanent contributor to government income." This would be a change: "Traditionally, the central bank has been a policy body and has not been run as a source of funds."

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Heather Horn