The Federal Reserve picked up a $52.1 billion profit last year, a record for the organization. The result is due largely to its 2009 bailout efforts. Of the profit generated, $46.1 billion will be handed over to the Treasury Department -- the largest profit payment made since records began back in 1914. The previous record was $34.6 billion, in 2007. Last year, the Fed turned $31.7 billion over to the Treasury Department.

According to the Associated Press, the profit didn't come from the $700 billion lent to financial institutions -- and then to auto companies like General Motors. Rather, it was the result of earnings from the securities it had in its portfolio last year. Several investment programs were launched last year to help kickstart the U.S. economy and drive down rates on mortgages and consumer debt. Through the programs, the Fed bought $300 billion in government debt, and under another, it's on a trajectory to buy $1.25 trillion in Freddie Mac and Fannie Mae mortgage securities.

If mortgage companies start to feel like they're losing elbow room, it's probably because they're starting to get nudged by the Obama administration. The folks in the White House are planning to kick off a campaign to squeeze mortgage companies to lower payments for even more borrowers who are in trouble. The $75 billion program, financed by taxpayers, to keep homeowners from falling into default appears to be in trouble.

Mortgage lenders have increased their efforts to modify borrowers' mortgages, but most of them are still in a trial stage, which will last up to five months. Only a handful have been made permanent, which isn't good enough for Washington. The Treasury Department's assistant secretary for financial institutions, Michael S. Barr, told the New York Times, "The banks are not doing a good enough job," continuing, "Some of the firms ought to be embarrassed, and they will be."

The Federal Reserve and its key players, including Federal Chairman Ben Bernanke, have almost taken on rock star status. With the new media and cable television networks like CNBC, every move that Sir Chairman makes or every word he utters is now headlines. Use to be the Fed Chairman could deliver 50 speeches around the nation and nary make a headline. Now, CNBC has a senior reporter covering every speech and trying to parse the Fed Chairman's every word. It's a great job if you enjoy Fed nuance.

The role of the Federal Reserve and the U.S. Department of the Treasury, led by former Goldman banker Hank Paulson, will be front and center these coming months. 2008 is an election year and the news on the housing front is not improving. Not too mention the millions of mortgages that are resetting to higher monthly payments throughout the course of 2008. The Federal Reserve will likely drop the key interest rate here in December and again in the first quarter. With the key Fed Funds rate at 4.5%, the bellwether 10-year U.S. Treasury Note yielding 3.95% is already signaling a minimum cut of 25 basis points, but more than likely 50 basis points. The housing market would welcome a 50-basis point drop; it would make a nice Christmas present.