Federal Reserve Balance Sheet Gets Bloated over Coronavirus Lockdown Costs

Posted on 02/04/2021

In nearly a 1-year span from January 29, 2020 to January 27, 2021, the Federal Reserve System grew its assets by US$ 3.253296 trillion to US$ 7.404926 trillion in assets. The coronavirus lockdowns were very expensive. To put things into perspective, in FY 2010 dollars, besides the loss of life and harm, the financial price tag of World War II was US$ 4.104 trillion, according to data from the Congressional Research Service (Library of Congress). World War II was the most expensive war in U.S. history and lasted fewer than four years. Other comparable wars in FY 2010 dollars include ,the second Iraq war costed US$ 784 billion (thru to FY 2011), Vietnam War (US$ 738 billion), U.S. American Revolution (US$ 2.407 billion).

The Federal Reserve increased its holdings of mortgage-backed securities by US$ 682.481 billion to a total of US$ 2.069769 trillion. These MBS are guaranteed by Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. U.S. Treasury Securities increased US$ 2.356999 trillion to a total of US$ 4.766107 trillion.

Some Net Portfolio Holdings at Jan 2021
Loans including Paycheck Protection Program Liquidity Facility, US$ 51.098 billion
Main Street Lending Program, US$ 33.301 billion
Corporate Credit Facilities LLC, US$ 26.3 billion
Municipal Liquidity Facility LLC, US$ 11.611 billion
Commercial Paper Funding Facility II LLC, US$ 8.558 billion
TALF II LLC, US$ 6.678 billion

*Loans includes primary, secondary, and seasonal loans and credit extended through the Primary Dealer Credit Facility, Money Market Mutual Fund Liquidity Facility, Paycheck Protection Program Liquidity Facility, and other credit extensions.

Central Bank Swaps, US$ 9.567 billion

Source: Federal Reserve System.
Source: Congressional Research Service (Library of Congress) Study, https://fas.org/sgp/crs/natsec/RS22926.pdf

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