Federal Reserve extends ban on big bank dividends, buybacks

By KEN SWEET
Posted 9/30/20

NEW YORK (AP) — The Federal Reserve is extending until the end of the year its restrictions on large banks and financial services companies paying out dividends and buying back stock.

The Fed …

To Our Valued Readers –

Visitors to our website will be limited to five stories per month unless they opt to subscribe.

For $5.99, less than 20 cents a day, subscribers will receive unlimited access to the website, including access to our Daily Independent e-edition, which features Arizona-specific journalism and items you can’t find in our community print products, such as weather reports, comics, crossword puzzles, advice columns and so much more six days a week.

Our commitment to balanced, fair reporting and local coverage provides insight and perspective not found anywhere else.

Your financial commitment will help to preserve the kind of honest journalism produced by our reporters and editors. We trust you agree that independent journalism is an essential component of our democracy. Please click here to subscribe.

Sincerely,
Charlene Bisson, Publisher, Independent Newsmedia

Please log in to continue

Log in
I am anchor

Federal Reserve extends ban on big bank dividends, buybacks

Posted

NEW YORK (AP) — The Federal Reserve is extending until the end of the year its restrictions on large banks and financial services companies paying out dividends and buying back stock.

The Fed made the announcement Wednesday aimed at bolstering the banks as the coronavirus pandemic has causes millions of Americans to fall behind on mortgages, credit card payments and auto loans.

All banks with more than $100 billion in assets will still to be able to pay dividends, but they will remain capped their levels before the original restrictions went into place in June, the Fed said. Stock buybacks will remain restricted until the end of the year.

The central bank enacted the original restrictions in June, as part of its annual stress tests for the nation's 33 largest banks. The Fed said that the risk of a double-dip recession was too great, and would put too much stress on banks' balance sheets, causing many of them to fall below critical capital levels. The restrictions were due to end Wednesday, with the end of the quarter.

While the U.S. economy is recovering from its pandemic shutdown earlier in the year, unemployment remains high and millions of Americans remain out of work. Millions of homeowners are in forbearance programs on their mortgages, or have asked for relief from payments on credit cards or auto loans. These loans would typically be considered deeply distressed or been written off in a normal economic environment.

The Fed's measures are designed to keep big bank capital levels at a high level, fortifying them if the coronavirus pandemic were to flare up yet again and require additional public health shutdowns.

Comments