Fed's "Other Assets" Hit All Time High Of $205 Billion

Tyler Durden's picture

Those looking for info on the Fed's now weely non-sterilized MBS purchases in the weekly H.4.1 update will be disappointed. The reason why the MBS line in the Fed's balance sheet will not move higher for a while is because, unlike TSYs, the settlement period for mortgage debt is usually many weeks and will months for all purchases already completed to appear in the "stock" total. One number, however, which may be of interest is the Fed's "Other Assets" because in the week ended October 10, this number hit an all time high of $205 billion and rising at an exponential phase.

Presenting Fed's Other Assets (2ry axis) together with total factors supplying reserves.

For those asking what "Other Assets" are, here is the official definition.

This item includes other Federal Reserve assets and non-float-related as-of adjustments. In addition to the as-of adjustments, there are many components in this category, including the following major items:


Assets denominated in foreign currencies: Foreign currencies are revalued to reflect movements in market exchange rates each day. If, in the revaluation, the value of the currency increases, then other Federal Reserve assets increase. On the other side of the balance sheet, "Other liabilities and capital" increase because the increase in value of the currency becomes earnings, which are reflected in the earnings category within the capital account. Other liabilities and capital decline in value as the earnings are removed from this category and the U.S. Treasury's general account increases because the funds are remitted to this account at the Reserve Banks.


Since 1963, the Federal Reserve has occasionally agreed to warehouse foreign currency for the Treasury. In such transactions, the Federal Reserve takes the foreign currency from the Treasury in return for dollars provided to the Treasury. The Federal Reserve makes a spot purchase of the currency and protects the value of those currencies purchased by simultaneously selling the same amount of currencies forward at the same price to the Treasury.


When the Federal Reserve warehouses foreign currencies for the Treasury, both "other Federal Reserve assets" and "U.S. Treasury, general account" increase in value at the time of the spot transaction. Both accounts decline when the forward transaction is completed or when currencies are withdrawn from the warehousing arrangement prior to maturity.


Premiums paid on securities bought: This release reports Federal Reserve holdings of securities at face value, not necessarily at market value. If the Federal Reserve pays more than the face value for securities it purchased, the premiums over the face value are amortized as the securities mature. Part of the premium is transferred daily to the earnings category as a "negative earning." As the premium in "Other Federal Reserve assets" is reduced, a simultaneous balancing reduction is made in "Other liabilities and capital." Securities purchased at a premium over face value are accounted for in this way because, at maturity, the Federal Reserve Banks receive only the face amount of the securities, not the amount actually paid.


The premiums paid on securities bought under repurchase agreements, though, are not amortized. These premiums are, in effect, returned to the Federal Reserve Banks when the securities are repurchased by the dealer, since the negotiated price in the original transaction reflects the premiums.


Accrued interest and other accounts receivable: This item represents the daily accumulation of interest earned on U.S. government securities--other than bills--owned by the Federal Reserve or held under repurchase agreements, on loans to depository institutions, and on foreign currency investments. Interest is accrued daily.


Reserve Bank premises and operating equipment less allowances for depreciation: This item states the value, at initial cost, of the land and buildings of the Reserve Banks and branches less an allowance for depreciation on buildings, including building-related machinery and equipment

No, it is not merely accrued interest as can be clearly seen here especially with the annual remittance of all accrued treasury interest. And yes, foreign currency transactions on behalf of the Treasury certainly do play a large role here. And of course, POMO.

Finally, let's not forget this from March:

As if the 'risk-less' dollar-swaps the Fed has extended to any and every major central bank were not enough, William Dudley just unashamedly admitted that the Fed now holds 'a very small amount of European Sovereign Debt'. Explaining this position, as Bloomberg notes:


Dudley, testifying to a House panel, noted that he doesn't see more efforts by the Fed to buffer the US from Europe's tempests and believes European banks are deleveraging in an orderly manner. So not only is the US taxpayer bailing out Europe via the IMF (as we noted here a week ago using Greece as an intermediary) and the Fed is providing limitless USD swap lines but now we join the ECB in monetizing European government bonds - something we warned might happen back in December 2010. As for being a small amount - wasn't MF Global's holding relatively small too? And aren't we getting a little full from all this buying?

Since "Other Assets" is the only place these European bonds can be placed, one wonders: just how much is "small amount"?

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lolmao500's picture

They should put voters on their other assets balance sheet...

Richard Chesler's picture

More like "Other garbage".


knukles's picture

I've told you guys once and I'll say it again, this is the catch-all for any and all "assets" that don't fit nicely into the other standard line items...
Like gold and silver futures sales... puts and calls on same as well as Treasuries... foreign outright long currency and PIGGY debt spec swaps and purchases not done on behalf of treasury or other central (Criminal) banks...

It's where all the marvelous and wonderful positions for the end of day equity stick save, beginning of day gold and silver bash downs..,.all them good stuffs goes to reside....

That you and I are never ever gonna know what's in it because the Fed was excused from disclosure for National Security Reasons (under several different acts) and already said so in CONgressional tits-ti-moany.  Hell Benji already said in tits-ti-moany that they were buying PIGGY shit....

This is the Zimbabweization of the Fed's balance sheet in real time living color

Sock Puppet's picture

I believe the "other" assets the Fed has is "gold" and lots of it.  To keep it out of the Gold nuts hand's.

Sock Puppet's picture

That would be an excercise in futility, as soon we will have only digital money.  No need for useless gold.  Look forwad ZHs not back.

Sock Puppet's picture

"we" is every human on the face of the earth.  It is called technology.  No need for some useless metal.  Phones will be the primary payment tool.  It will be great for Govs to stop money laundering, drug traffic, tax evasion, the list of benefits goes on and on.  There will always be a digital trail for every single Federal Reserve Note.  Digital Dollars for the less sophisticated like yourself.

akak's picture

What you are describing is an Orwellian nightmare to most here, and rightly so.

Damn you and your Total Surveillance State.

francis_sawyer's picture

Fed's OTHER ASSETS... The OTHER white meat...

Sock Puppet's picture

"Total Surveillance State" it is already in place for our own safety.  All I ever here on ZH is how the banksters are laundering money and the rich are evading taxes.  Thats fucked up when we need of DOD dollars we can get.  Let us unite and be stronger.  Otherwise it time for arrest, no trial and some long time mental evaluations for speaking you mind.

knowless's picture

then transfer all your wealth into bitcoins if you feel it is so imminent

JohnnyBriefcase's picture

"It will be great for Govs to stop money laundering, drug traffic, tax evasion, the list of benefits goes on and on."


But how will the .gov fund all their black ops without money laundering and drug trafficking?

Oh you meant stop other people from doing that.


Sock Puppet's picture

Your a quick one, nothing get by you I bet.

Beam Me Up Scotty's picture

That will be when they have total control over "we".  Gee, we are sorry, you account balance is temporarily unavailable.  Please try again later.  They can shut you off from your funds with one simple keystoke then.

Sorry you almost starved to death, we thought you were someone else.  We didn't mean to deny you access to your funds.

It totally amazes me how willing people are to submit to this bullshit.  You think your phone will be safe and secure from theft?  You think you account will be safe and secure?  Good luck with that.

nmewn's picture

Fucking troll.

"I believe the "other" assets the Fed has is "gold" and lots of it. To keep it out of the Gold nuts hand's."

So you can't prove the Fed holds anything but a digital printer while saying they have "lots" of "useless" gold.

I guess I'm done conversing with this idiot.

Sock Puppet's picture

Watch you fucking mouth, you mother fuckin, cocksucken, son of a bitch.  Disprove my theory then asshole.

Trolollloollooolllllloooooolllllloooooollolllllloooooooooo I love to listen to this song while I am out Trollin.

DeadFred's picture

You already killed more electrons than he's worth writing what you did.

SafelyGraze's picture

some of my non-float-related as-of adjustments have been on the increase lately as well, if you get my meaning.

would you like to see them?

come. let me show you the engine that powers my life.

MarsInScorpio's picture

I'm posting this in hopes the management of ZH will read it and take it to heart:


This morning, ZH got linked from DrudgeReport with the article about the bogus claims numbers and the missing state data, and obviously ZH's servers are completely inadequate to handle the volume. They crashed big time. So Drudge went to CNBC, which basically rewrote the ZH article.




Well, today was your Big Day and you blew it. I don't know who your server company is, but you need to immedaitely fire them and find one that is scalable to demand.


Drudge finally gave you a shot, and your servers crashed. This guy gets a BILLION page views per month - second only to the NY Times.This was the biggest opportunity you ever had to break out of the fringe blog niche and hit the mass readership niche.


You people kick fanny with your blog. It is so far ahead of any other one out there. You could be the Drudge of finance.


But you can't be first tier in readership with third tier server capacity. So it's time to upgrade.


In fact, you need to write an article about what happened with Drudge today, and let him know you really appreciate the link, and got the idea about bandwidth.


You don't get more than two chances with Drudge. And you blew one of them today.


Don't be stupid and wait to blow the last one.






NotApplicable's picture

I agree... but... I don't know about the increase in trolls...

francis_sawyer's picture

Drudge are a bunch of idiot redneck pussies... Tyler should be happy to not have any affiliation...

Drudge is nothing more than a 'controlled opposition' mechanism for 100% support (& being a shill for) of the Apartheid State of Israel... Even Netanyahu thinks Drudge readers are idiots...

Sock Puppet's picture

WTF, didn't you know Israel is our best ally in the war on terror.  What a dipshit comment.  I think your mom is calling you for dinner.

MeelionDollerBogus's picture

Israel IS the terrorist - are you trying to be the next MDB-clone?

HD's picture

No thanks.  Granted ZH has a few folks that are bat-shit crazy but most are reasonable, concerned people who contribute ideas and ask intelligent questions. The last thing ZH needs are team red/blue bomb throwers foaming at the mouth.

toomanyfakeconservatives's picture

Ummm..... this website didn't need Drudge, his radio show, or his fame to achieve an Alexa internet traffic ranking of ~800 to Drudge's ~430. The incessant babbling of radio talk jocks, conservative or otherwise, including Drudge makes my head hurt.

TheCanadianAustrian's picture

I'd much prefer to continue to buy gold and silver at a reasonable price and live in an economy on heroin. So, please owners of ZH, disregard his pleas.

Bay of Pigs's picture

Glad to hear of some kind of an explanation.

But why were there troubles worldwide on other sites as well? it wasnt just ZH having issues.

Tyler Durden's picture

Drudge, as does Huffington Post, and all other websites regardless of political affiliation, link to Zero Hedge on a virtually daily basis due to its impartial analysis.

The reason today's traffic was abnormal is because we broke news of a very touchy issue and had nothing to do with Drudge per se.

In fact, as calculated daily by Technorati, which ranks sites based on inbound links and popularity, Zero Hedge is by far the most read financial website in the world: see here.

In other words, we appreciate your advice. We, will however, keep on doing whatever we do and however we do it.

Finally, we have no interest at all in being the "Drudge of finance." We do, however, have every interest in being the Zero Hedge of finance.

Go Tribe's picture

Sticking to what you do best. Unusual these days.

MarsInScorpio's picture

Thank you for taking time to reply.



Seasmoke's picture

what DON"T they buy ?? ........next stop ONE TRILLION

LiesAreTheOnlyTruth's picture

They should be forced to post ALL assets/liabilities on a DAILY basis.  Even OFF SHEET, probably by now in the 20 Trillion range.

In 2009, "In the video clip she [Elizabeth Coleman, Inspector General for The Fed] says she knows nothing about nine trillion dollars ($9,000,000,000,000) that is claimed to be unaccounted for."  It's on YouTube somewhere ... but if it was 9T then ... it's got to be nearly triple by now!!

Oh ... and this is not some wild ass conspiracy ... she is actually on CSPAN in front of a congressional hearing telling them she's missing 9 Trillion dollars.  So it's original, right from the horses mouth ... or other end as the case may be :)

Urban Redneck's picture

Too many balance sheets involved...

TrustWho's picture

...more like...we (Fed & Treasury) can do anything we fucking want to do and the muppets can do nothing to stop us.

zorba THE GREEK's picture

Time to audit the Fed and Fort Knox.


Sock Puppet's picture

Time to support your country, I assume the US, or go back to Grease, I hear they are doing great.

Sock Puppet's picture

Looks like some future Fema Camp fucks are down voting me.  If you can't support your country and all you can do is bitch then it is time for some foreced labor reeducation or get the fuck out.  I just sayin.

chump666's picture

Lay off the drugs it's melting your f*cking membranes.

Cliff Claven Cheers's picture

WTF is the F* thingy, are we in 3rd grade here or are tylers trying clean up our speech. 

MeelionDollerBogus's picture

Maybe your inept words needed voting down - it's supporting your (USA) country to audit the fed, shut it down, audit fort knox & put the banksters in jail - yet your tone sugggests you feel the opposite, hence very much deserving of down-votes

Boilermaker's picture

Wouldn't it be great if this actually meant something?

They're already past the 'shock factor'. They won that war already.

Cursive's picture

Great.  The Fed is buying Euros and MBS at a premium, i.e. above face value.  Anybody who has a problem with Obama phones should be talking about this instead.

ebworthen's picture

Other assets?

Spanish and Italian Stocks and Bond funds?

Overnight currency swaps and whatever billion figure the IMF wants this week?

Backdoor loans to J.P. Morgue and Wells Fargone at 0.05% to loan out at 5%-29%?

PLove's picture

Jeebus, what a shithouse.


Can I get my cancer shot now,

or must I wait for mandatory injection.

davepowers's picture

thanks for explaining there's a delay in getting the QE3 MBS purchases onto the balance sheet. The non increase since QE3 announcement was making it look like there were ulterior motives for delaying the actual QE.

The 'other' category in both assets and liabilities is always entertaining because the definition of 'other' always ends with the words 'and other' assets or liabilities.

sort of 'other' squared.