U.S. taxpayers are in line for a big payday, but it is not quite what it seems.

The Federal Reserve is out with its year-end tally of net income Tuesday, and the central bank says it expects to return $76.9 billion to the U.S. Treasury. While that may seem like a windfall for Uncle Sam, a large portion of the figure amounts to taking money out of one pocket and putting it in another: interest payments on U.S. government bonds account for a sizable chunk of the income.

The Fed, which is bound to return residual earnings of each of its district banks after certain costs, derived 2011 net income of $78.9 billion, chiefly from $83.6 billion in interest income on securities acquired through open market operations. Those securities include bonds and mortgage-backed securities tied to government-sponsored enterprises, primarily Fannie Mae and Freddie Mac, interest paid on U.S. Treasury securities were the biggest factor as a result of the central bank’s massive government bond purchases through quantitative easing.

Net income returned to the Treasury is actually down somewhat in 2011 from a record $79.3 billion in 2010, partially due to the repayment of crisis-era loans by American International Group that had been generating interest.

Read More: http://www.forbes.com/sites/steveschaefer/2012/01/10/worlds-most-profitable-bank-will-deliver-77b-to-u-s-treasury/

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