U.S. taxpayers see $46 billion in profit after bank bailout

WASHINGTON — In dual developments that underscored the complex reality of stressful financial times, the Federal Reserve said Tuesday that it returned to taxpayers a record $46 billion in profit from its rescue of the financial system, while a congressional committee announced that it had subpoenaed controversial bailout documents from the central bank.

In a statement, the Fed revealed that its district banks had made a $52 billion profit in 2009 from the purchase of government securities as part of efforts to stabilize the U.S. and global financial systems.

After deductions, $46 billion was returned to taxpayers through a payment to the Treasury Department.

Such welcome news was quickly eclipsed by word that the House Committee on Oversight and Government would subpoena documents relating to the Fed's rescue of insurer American International Group.

Shortly afterward, the top Republican on the panel, Rep. Darrell Issa, R-Calif., released a letter showing that the Fed has sought to block the release of certain AIG information.

The House committee has called Treasury Secretary Timothy Geithner to testify later this month about why AIG payments were made to big investment banks in what appears to have been a back-door bailout. Geithner headed the Federal Reserve Bank of New York at the time.

The House panel's aggressive inquiry reflects widespread anger at the Fed.

"I don't recall any time in my lifetime that the antipathy toward the Fed was as great as it is now," said Lyle Gramley, a Fed governor from 1980 to 1985.