Fed to lift bank restrictions on dividends, buybacks by June
Bank dividends, buybacks will depend on June stress tests
In another strong sign the U.S. economy is recovering, the Federal Reserve plans to remove a rule that handcuffed the banks from raising dividends and buying back shares.
The Fed, provided these financial institutions pass the next round of stress tests set for June, will remove the restrictions, as detailed in a statement.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| JPM | JPMORGAN CHASE & CO. | 250.29 | +1.74 | +0.70% |
| BAC | BANK OF AMERICA CORP. | 47.50 | +0.50 | +1.06% |
| WFC | WELLS FARGO & CO. | 76.90 | +0.94 | +1.24% |
| GS | THE GOLDMAN SACHS GROUP INC. | 603.03 | +0.25 | +0.04% |
Big banks such as JPMorgan, Bank of America, Wells Fargo, and Goldman Sachs, rose during Friday's session.
In what may have been some foreshadowing, U.S. Treasury Secretary Janet Yellen, earlier this week during her testimony with Fed Chairman Jerome Powell, said banks looked healthy and could begin to restore dividends in response to a question.
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Stress tests, instituted following the 2008 financial crisis, are aimed at ensuring U.S. financial institutions are well-capitalized in the event of a sharp downturn and able to lend to consumers and small businesses.
This is the second reprieve the Fed has granted the banks. Last week the Fed told banks capital level requirements that were eased during the pandemic would return to normal at the end of this month.