Fed's IOR Gamble Results in Second Straight Year of Operating Losses

Jai Kedia

The Fed’s audited financial statements for 2024 show that it suffered operating losses of $77.6 billion. That’s on the heels of losing $114.3 billion in 2023, for a two-year total of $191.9 billion. The culprit of these losses? The large amounts of interest it pays on bank reserves.

The Fed drastically changed its operating framework during the financial crisis of 2008. At the time, most of the attention fell on the Fed’s quantitative easing program. But the size of...