The Federal Reserve Balance Sheet is now less than $7 trillion for the first time since 2020.

 See: https://fred.stlouisfed.org/series/WALCL

The balance sheet is now at $6.967 trillion.  It has been dropping at the rate of about $50 billion per month, so if this trend continues, it will be below $6 trillion by the summer of 2026.  With a lower balance sheet, the Fed should be able to lower the interest that it pays and to lower its losses, which continue at the rate of about $6.5 billion per month.

How much of the balance sheet is for reverse repos?  It is now $214 billion. (See https://fred.stlouisfed.org/series/RRPONTSYD ).  This is money the Fed is borrowing, at market interest rates, from mutual funds.  This number should be at $0.  The Fed doesn't need the money (since it can create money out of thin air), and the mutual funds can invest their money in US treasury bonds, of which there are a lot.  Maybe the Fed should reduce the interest rates it pays on the reverse repos, currently at about 4.5%, to discourage mutual funds from using this, and to save a little interest expense, since the Fed is losing money.  But the Fed doesn't care about losing money - they care more about bailing out their Wall Street buddies.

Hopefully this situation will resolve itself in a few months, with the balance sheet keep dropping.  On the other hand if there is a crisis in early 2025, either through a recession starting, or a bank crisis because of BTFP expiring, or because Congress cannot agree to quickly raise the debt ceiling (which expires on Jan 2, 2025), then the Fed may do an emergency QE program and raise the Fed balance sheet above $10 trillion.  

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Update: Now the Fed is talking about lowering the RRP rate from 4.55% to 4.5% to discourage its use.

Eliminating the 5 basis-point spread between the overnight reverse repurchase agreement rate and the bottom of the monetary policy rate would make the reverse repo facility -- widely viewed as a proxy for excessive liquidity -- marginally less appealing.  Some Fed officials at the Nov. 6-7 meeting felt that "at a future meeting, there would be value in the (Federal Open Market) Committee considering a technical adjustment to the rate offered at the ON RRP facility" to bring it back down to equal the bottom of the policy rate range, according to the minutes.

https://www.reuters.com/markets/us/some-fed-policymakers-open-lowering-overnight-repo-rate-2024-11-26/