At present, income from the high level of reserves and from the payment of illiquidity assistance more than offsets outlays, which are mainly related to payments of interest on securities issued by the Central Bank and the premia paid on its repo transactions.
Some of these losses were from products—such as super-senior collateralized debt obligations (CDOs) or structured investment vehicles (SIVs)—whose risks were not even on the radar screen of the firm’s board of directors. After the crisis, the Federal Reserve significantly raised our expectations for the boards of directors of large banking firms.