Federal Reserve paying U.S. record $78.4 billion windfall

The Federal Reserve is paying a record $78.4 billion in earnings to the U.S. government, reflecting gains from the central bank’s unconventional efforts to lift the economy.

The payment to the Treasury Department for 2010 is the largest since the Fed began operating in 1914. It surpasses the previous record $47.4 billion paid in 2009, the Fed said Monday.

The bigger payment mostly came from more income generated by the Fed’s massive portfolio of securities, which includes Treasury debt and mortgage securities.

Critics in Congress have expressed concerns that the Fed’s purchases could put taxpayers at risk by reducing the amount turned over to Treasury. The Fed is funded from interest earned on its portfolio of securities. It is not funded by Congress. After covering its expenses, the Fed gives what is left over to the Treasury Department.

Income from the Fed’s portfolio of securities came to $76.2 billion last year, up from $48.8 billion in 2009, Federal Reserve officials said.

Stocks finish mostly lower; AT&T drops on iPhone news

Stock indexes were mostly lower Monday, with telecommunication companies leading the way down.

AT&T Inc. fell the most out of the 30 stocks that make up the Dow Jones industrial average. Its competitor, Verizon Wireless, is expected to announce today that it will start selling Apple Inc.’s iPhone, breaking AT&T’s long hold on iPhone customers.

AT&T’s stock dropped 1.8 percent to $28.34.

Stocks spent most of the day lower ahead of the latest round of corporate earnings reports. After the market closed, Alcoa Inc. reported that rising sales of aluminum products helped it turn a profit of 24 cents a share in its fourth quarter.

The week started with news of two big corporate deals. DuPont said it would buy a Danish food maker for $5.8 billion, and Duke Energy Corp. said it will buy Progress Energy Inc. in a $13 billion deal that would create one of the country’s largest utilities. Duke fell 1.2 percent to $17.58.

The Dow fell for the third straight day, losing 37.31 points, or 0.3 percent, to close at 11,637.45.